Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

ROYAL ASSENT

Mr. Speaker: I have to notify the House that in accordance with the Royal Assent Act, 1967 The Queen has signified Her Royal Assent to the following Acts:

1. Customs Duties (Dumping and Subsidies) Amendment Act, 1968.
2. Agriculture (Miscellaneous Provisions) Act, 1968.
3. Water Resources Act, 1968.
4. Maintenance Orders Act, 1968.
5. Education (No. 2) Act, 1968.
6. Sale of Venison (Scotland) Act, 1968.
7. Gas and Electricity Act, 1968.
8. Family Allowances and National Insurance Act, 1968.
9. Countryside Act, 1968.
10. Thames Valley Water Act, 1968.
11. Saint George, Botolph Lane, Churchyard Act, 1968.
12. Birmingham Corporation Act, 1968.
13. University of Wales Institute of Science and Technology Act, 1968.
14. London Transport Act, 1968.
15. Felixstowe Dock and Railway Act, 1968.
16. Durban Navigation Collieries Act, 1968.
17. Saint James and Saint Paul, Plumstead Act, 1968.

PRIVATE BUSINESS

SOUTH AFRICAN BREWERIES BILL [Lords]

As amended, to be considered Tomorrow.

Oral Answers to Questions — SCOTLAND

Teachers (Promotion Procedure)

Mr. Noble: asked the Secretary of State for Scotland what representations he has received about the factors affecting the promotion of school teachers in certain local authority areas in Scotland; what action he is taking; and if he will make a statement.

The Under-Secretary of State for Scotland (Mr. Bruce Millan): My right hon. Friend is seeking comments from education authorities on recent representations by the Educational Institute of Scotland to the effect that very few authorities were following the recommendations about promotion procedure contained in the Report "Relations between Education Authorities and Teachers" published in 1962.

Mr. Noble: Will the Under-Secretary make clear to the House and to local authorities that the aspect of the Report which said that in certain local authorities promotion went only to people with the correct political background is against the policy which we would all wish for education in Scotland?

Mr. Millan: I am not sure that the Report said that, but it laid down that there should be certain promotion procedures. The complaint is that the procedures are not always carried out and, as I say, we are already in touch with the education authorities about this.

Royal Commission on Local Government

Mr. Noble: asked the Secretary of State for Scotland when he expects to receive the report of the Royal Commission on Local Government in Scotland; and when he expects it to be published.

The Minister of State, Scottish Office (Dr. J. Dickson Mabon): My right hon. Friend hopes to receive the report by the end of the year, and intends to publish it as soon as possible thereafter.

Mr. Noble: While thanking the Minister of State for his reply, may I ask


him to bear in mind—I am sure he will —that the report will be of great interest to everybody in Scotland, and that there should be the minimum delay before hon. Members and others see it.

Dr. Mabon: Yes, I quite accept that. The Government's view is that this will help us in our thinking about the efficient delegation of further powers to local authorities. We are all searching for the kind of devolution that will encourage the fullest participation of the public in local government so that we have authorities with teeth and strength.

Mr. Hector Hughes: Since important educational and industrial developments have taken place since the Commission was appointed, will the Minister take such steps as are available to him to see that the report when it comes out is up to date?

Dr. Mabon: Yes, Sir. I am certain that the Royal Commission will be aware of all the changes there have been since 1966.

Nurses and Midwives (Pay)

Mr. William Hamilton: asked the Secretary of State for Scotland what representations he has received criticising the salary proposals contained in Report Number 60 of the National Board for Prices and Incomes on the Pay of Nurses and Midwives in the National Health Service; and what steps he plans to take to remedy the anomalies contained within the Report's recommendations.

Mr. Millan: I would refer to the reply which my right hon. Friend gave to my hon. Friend the Member for Coatbridge and Airdrie (Mr. Dempsey) on 27th June.—[Vol. 767, c. 122–123.]

Mr. Hamilton: Will my hon. Friend bring his Answer, whatever it was, up to date, and will he say whether he has had representations from organisations representing nurses on the career structure and certain anomalies in relation to nursing tutors, as there is a good deal of concern among nurses, both individually and collectively?

Mr. Millan: The matter was brought up to date by the debate on Monday of this week, and I have nothing to add to

what my right hon. Friend the Minister of Health said then. This matter has been exhaustively considered.

Aluminium Smelter

Mr. William Hamilton: asked the Secretary of State for Scotland what is the estimated date on which the aluminium smelter is expected to be in full operation; whether he is satisfied that sufficient skilled labour will be available to man the project; and if he will make a statement.

Dr. Dickson Mabon: Discussions with the British Aluminium Company are still proceeding. I have no reason to think that the supply of skilled labour would prove difficult.

Mr. Hamilton: Will my hon. Friend say what precisely the delays are now and how soon they will be resolved. One recognises the difficulties, but however difficult it may be, it is time we had a decision one way or the other. Will he say how many jobs would be involved in the event of a smelter being sited in Scotland and how the number would compare with the number of jobs created by Rio Tinto and the others?

Dr. Mabon: I agree that these matters are quite complex. The discussions have been going on in strict confidence, and it would not be possible for the Government to break that confidence. Therefore, I cannot answer the first part of the question. In reply to the second part of the question, the figure given by the British Aluminium Company is 600; in respect of Rio Tinto-Zinc the figure is 700 and in respect of Alcan the figure is 550, possibly rising to a higher figure later.

Mr. G. Campbell: Can the Minister of State even give an estimate of the date on which a firm announcement can be made about this? Did not the Government underestimate all the factors involved, including the reactions of E.F.T.A., and has not the Government's bungling caused a great deal of unnecessary anxiety in the areas concerned?

Dr. Mabon: I do not accept that a large project involving £70 million of investment and operating to virtually the end of the century is a simple matter which can be answered swiftly. I do not


accept the last two points which the hon. Gentleman has made. As for the first part of his supplementary question, the answer is, no, Sir.

Mr. Brewis: Has the Minister of State yet resolved the E.F.T.A. difficulties, and would it not have been better if the Government had not changed their investment grant system, which is the only reason why E.F.T.A. is objecting?

Dr. Mabon: I should prefer to await the statement which is to be made shortly.

Mr. Alasdair Mackenzie: asked the Secretary of State for Scotland if he will now make a statement on the siting of an aluminium smelter at Invergordon.

Mr. Monro: asked the Secretary of State for Scotland if he will now make a statement on the siting of an aluminium smelter in Scotland.

Dr. Dickson Mabon: I am unable at present to add to the reply I gave to the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) on 17th June.—[Vol. 766, c. 102.]

Mr. Mackenzie: Is the Minister aware that the delay in announcing the project is causing very serious doubts about the sincerity of the Government's intentions towards it? Will he assure the House now that he will make a definite decision about the Invergordon project before the beginning of the Summer Recess?

Dr. Mabon: I know that this is causing concern, but I do not accept that it casts doubts on the Government's sincerity, as I hope will become clear when the matter is explained fully to the House at a later stage. I hope that that will be before the end of the Session.

Mr. Monro: As the Alcan site could be decided in May, why has it taken so much longer to come to a final decision about the British Aluminium site? Is it a question of the electricity supply, or is another site being considered?

Dr. Mabon: The hon. Gentleman knows that I cannot answer that question.

Mr. Steele: Is my hon. Friend aware of the dangers to agriculture because of the fall-out of dust from such an installation? May we have assurances that

before planning permission is given any company which succeeds in going ahead with the project will give all the assurances necessary to ensure that there will be no nuisance of that kind?

Dr. Mabon: I would direct my hon. Friend's attention to the public inquiry into the amendment to the Ross and Cromarty development plan. He should read it, and I am sure that he will find the assurances he seeks in it.

Mr. Manuel: Does my hon. Friend recognise that it is now time hon. Members were told the position and why the delay is so great? Is it because of difficulties with our E.F.T.A. partners? If so, we should be told bluntly and told what the obstacles are, thus relieving many people of the need to give wrong reasons for the delay.

Dr. Mabon: I sympathise with my hon. Friend, and I should love to tell the House everything that is going on, but I could do so only at risk to the project and, therefore, I must not yield to that temptation.

Mr. Grimond: Can the Minister give us the latest statistics available to the Scottish Office about the saving in monetary terms of imports which will result from the setting up of the smelter?

Dr. Mabon: No, Sir, not without notice. I should have to go into that a little more deeply.

Seed Testing Work, East Craigs

Mr. Stodart: asked the Secretary of State for Scotland what plans he has made for the continuation of the seed testing work done at East Craigs, Corstorphine, in the light of the approval which he has given to the recommendation that the land at East Craigs should be developed for building.

The Under-Secretary of State for Scotland (Mr. Norman Buchan): The buildings at East Craigs will continue to fulfil their present functions including those of seed testing. Field work will be carried out on other state-owned land which will more amply meet the needs of the station.

Mr. Stodart: Can the hon. Gentleman give us indication where that is to take place? Can he say how he managed to


ignore the statement made in the report that East Craigs is of great scientific importance to the nation and should not be disturbed under any circumstances?

Mr. Buchan: The alternative place is only 2½ miles away. It is attached to Gogarburn Hospital. The existing land was too small for their needs and, to expand, we have moved to a large area, where there are 200 acres instead of 90 acres, which again fulfils the needs put forward in the report.

Farms (Net Incomes)

Mr. Stodart: asked the Secretary of State for Scotland whether the figures given in Appendix IV of Command Paper No. 3558, showing net incomes on dairy and cropping farms in England and Wales and Scotland, respectively, are calculated on a precisely similar basis.

Mr. Buchan: The accounting procedures are precisely similar, but the systems of farming designated as dairy and cropping differ to some extent because of differing natural conditions in the two countries.

Mr. Stodart: In view of the fact that Scottish farmers are recognised to be the most efficient not only in this island but in the world, can the hon. Gentleman say why the net income of a Scottish cropping farm has been only £7 per acre compared with £13 in England? Are the climatic differences to which he refers the differences in the political climate which have caused the income to drop to one-half since 1964?

Mr. Buchan: With his own wide knowledge of farming, the hon. Gentleman should know the problems involved. Climatic, soil and other conditions are involved here, but certainly not political ones. As it happens, the relative positions of incomes from farming as between England and Scotland are improving in our favour.

Prescription Charges

Mr. Dewar: asked the Secretary of State for Scotland what he estimates the cost to be of exempting from the payment of prescription charges those women be-between the age of 60 and 65 years who are in receipt of a retirement pension; and how many persons would be affected.

Mr. Millan: It is not possible to provide an estimate of the cost of exempting this section of the population. The latest available figure for the number of women in Scotland between the ages of 60 and 65 and in receipt of retirement pension is 68,300.

Mr. Dewar: Would my hon. Friend not accept that if a woman does not decide at 60 to opt to retire on pension, she may be in the same financial position as a man or woman over 65 and may be in the same health position, and that if he is not prepared to reconsider the matter, we are creating an underprivileged section of old age pensioners?

Mr. Millan: I do not think so. If my hon. Friend applies the test of income, there are separate grounds for exemption on the basis of income. Comparing men and women between 60 and 65 is rather a different matter. As has been pointed out on more than one occasion, there is no evidence that, in that age group, the number of prescriptions required by women is greater than that required by men. Indeed, the evidence rather points in the opposite direction.

Mr. MacArthur: Will the hon. Gentleman consider the difficulties faced by elderly people in remote areas in following the procedures required of them now? Will he bear in mind that there is a need for flexibility to meet the requirements of people living some way away from a chemist in the local town?

Mr. Millan: I am not sure what these difficulties are which are peculiar to people living in remoter areas. If the hon. Gentleman likes to send me details, I shall look at them.

Approved School Places

Mr. Dewar: asked the Secretary of State for Scotland what is the number of approved school places presently available in Scotland; and what percentage increase he expects in the next three years.

Mr. Millan: There are 1,820 places available at present and an increase of 158 places or 8·7 per cent. is expected in the next three years.

Mr. Dewar: While accepting those figures, will not my hon. Friend accept


the public's willingness to support the Government's very right emphasis on the proper treatment of offenders as the answer to the real crime problem is being seriously undermined by constant reports from the courts about the unavailability of residential accommodation places for young offenders, and, if this position is not soon put right, we will be in real difficulties?

Mr. Millan: The matter is slightly more complicated than that. It is important that we have the right kind of residential accommodation required, but we have also to take into account whether in every circumstance children being sent to residential accommodation really need the kind of approved school provision that we have. A rather disturbing feature about Scotland is the emphasis on approved school accommodation that we have which is rather greater than they have south of the border. This factor requires examination as well as the provision of more places. But on the later point, we are providing additional places now.

Fauldhead Colliery, Kirkconnel

Mr. Monro: asked the Secretary of State for Scotland what consultations he has had with the National Coal Board concerning the retention of Fauldhead Colliery, Kirkconnel

Dr. Dickson Mabon: In accordance with the arrangements set out in paragraph 114 of the White Paper on Fuel Policy, my Department maintains continuing liaison with the National Coal Board in Scotland about colliery closures. These arrangements have naturally covered Fauldhead Colliery which the Board now intends to close on 19th July.

Mr. Monro: As 600 men will be displaced by this closure, may I ask whether the Secretary of State recommended that the colliery should be kept open under Clause 5 until industry had been attracted to the advance factory at Sanquhar?

Dr. Mabon: The hon. Gentleman received a letter from the Minister of Power which is, I think, dated 14th June, in advance of the actual decision being made known to the local people, which explains the reason why the Government have taken this view. Essentially, it is in the

long-term interests of the men concerned —and he and I met them as recently as last February—that they take advantage of the redeployment in mines nearby and of the developments at Cumnock and, I hope, at Sanquhar later.

Mr. Emrys Hughes: Is my hon. Friend aware that miners in the area are grateful for the work being done at the advance factory in the Cumnock area? If that could be expanded, work could be found for the miners displaced at Fauldhead. Will the Minister examine those facts?

Dr. Mabon: Yes, Sir. I know for a fact that at Cumnock developments are quite good, and I hope that they will become better. I recognise the seriousness of the position locally, and I share the disappointment over Sanquhar, but I hope that the advance factory there will be filled and perhaps another one built later.

Imported Raw Materials

Sir C. Osborne: asked the Secretary of State for Scotland what estimate he has made of the proportion of the raw materials consumed in Scotland by industrial processes, distribution and personal consumption which is produced in Scotland; and what is the estimated cost of the imported materials.

Dr. Dickson Mabon: I regret that no reliable estimates can be made.

Sir C. Osborne: I regret that, too. Could the Minister say, roughly, since Scotland possesses only some low-grade and dearly-got coal, how much the standard of living of the Scottish people would have to be reduced under complete independence if they had to pay for their own imports?

Dr. Mabon: I would not accept that premise entirely, although I quite see the point that the hon. Gentleman is trying to make. The reason why we are unable to give the information for which he asks is that we would have to calculate the value of cross-border movement because of our common market with England, Wales, Northern Ireland and perhaps even Southern Ireland. It would be a big imposition on the Government to have to undertake such a survey to prove the point.

Mr. Hugh D. Brown: While it is not clear whether the hon. Member for Louth


(Sir C. Osborne) is for or against the hon. Member for Hamilton (Mrs. Ewing), surely it is time that the Government took steps to undertake a complete economic analysis to substantiate the claim which many of us make that economic separation would be disastrous?

Dr. Mabon: I agree, but I cannot give the hon. Gentleman the information that he is asking for. I would if I could, because I think that it would substantiate his point.

School Meals, Lanarkshire

Mr. James Hamilton: asked the Secretary of State for Scotland how many children in Lanarkshire received school meals free in the month preceding the increased charges; how many received them in the month following the increase; and if he will make a statement.

Mr. Millan: During the periods referred to, which include the Easter holiday, the average daily numbers of pupils receiving school meals free were 8,610 and 18,269, respectively.

Mr. Hamilton: Is my hon. Friend aware that since the increase in the price of school meals many children requiring them do not take them? Is he aware that the increase is in children whose parents can afford to pay and are prepared to pay? Will he give the matter serious consideration?

Mr. Millan: There has been some reduction in uptake in Lanarkshire. It is a little difficult at this early stage to know what the final results will be. That reduction has been about 10 per cent. The figures I gave in my Answer demonstrate that the new arrangements provide free meals for a very much larger percentage of the children taking meals. It is now 37 per cent. compared with 16 per cent. previously, and therefore I cannot accept my hon. Friend's criticism.

Storm-Damaged Houses, Glasgow

Mr. Edward M. Taylor: asked the Secretary of State for Scotland when he estimates that all homes suffering from storm damage in Glasgow will be wind and watertight.

Dr. Dickson Mabon: Glasgow Corporation aims to have all roofs adequately

repaired by the end of September, and we are giving it all possible help.

Mr. Taylor: Is the Minister aware that there was a serious storm, approaching a monsoon, in Glasgow yesterday which did a great deal of damage? Can he give any indication of the amount of damage done and the extent to which it will set back the repair work?

Dr. Mabon: No, Sir. I do not have sufficient details at present. As the hon. Gentleman knows, I am in active touch —[Interruption.]—it is impossible for me to look after everything all at once. I am waiting for the report from Glasgow. The monsoon did not affect only Glasgow. I wish that the hon. Gentleman realised that Scotland consists of more than Glasgow. We must get all the reports in before my right hon. Friend can decide whether a statement should be made to the House. I shall not answer questions off the cuff. Repair workers are having to go on to the roofs many times in the city and elsewhere to deal with such temporary setbacks. I shall know the full measure of the problem when we have our next meeting. I have been having regular meetings with the Corporation almost every week since the beginning of January.

Mr. Galbraith: Is the Minister aware that if the estimate of having all houses finished by September turns out to be optimistic, and so houses are not wind-and water-proof by the beginning of the winter, feeling in Glasgow will be very high? In the coming months, will he apply himself to the progress made in repairs?

Dr. Mabon: I shall continue to do what I have been doing for the past six months—trying as hard as I can to deal with the damage, not only in Glasgow but in the rest of Scotland. Of public sector houses damaged, 85 per cent. have been repaired, and 50 per cent. of private sector houses damaged have been repaired. If the hon. Gentleman is tempted to make a party point of this, he should consider the activities of some landlords.

Mr. James Hamilton: Is my hon. Friend aware that much of the damage was the result of bad landlords in the past? Is he aware that in my constituency of Bothwell, all the houses have


been made wind- and water-proof, and my constituents are very grateful to the Government for their efforts?

Dr. Mabon: I am much obliged to my hon. Friend. Hon. Members should pay attention to the fact that many landlords are trying to get repairs carried out by the Government or the local authority which should have been done before the storm.

Mr. Noble: Does not the Minister agree that if there has been a very serious storm in Glasgow last night, while we do not expect him to give us full details, we do not accept that he should not say something off the cuff? If there is a serious situation, will he make a statement tomorrow?

Dr. Mabon: If the situation is such as to merit a statement tomorrow, my right hon. Friend will consider it. We are in daily touch with the Corporation, and so far have not had an adverse report on this.

Mr. Hannan: Will my hon. Friend confirm that these houses have been letting in rain and storms for a long time, long before the storm, and that it is most fortuitous that at least a storm yesterday gave hon. Members opposite reasons to ask supplementary questions?

Dr. Mabon: If we finish repairing properties in Glasgow by the end of September, the stock of houses in Glasgow will be in better repair than they have been in for the past 40 years.

Police

Mr. Edward M. Taylor: asked the Secretary of State for Scotland how many police officers were recruited to Scottish forces in the first six months of 1968; how many men were lost to the forces in the same period; and what was the main reason given by those who left the forces voluntarily during that period.

Mr. Buchan: During the first six months of 1968 a total of 458 police officers—418 men and 40 women—were recruited to Scottish forces: in the same period 358 officers left—313 men and 45 women. Voluntary resignations accounted for 186 officers—151 men and 35 women: information about the reasons given for resignation is not available for this period.

Mr. Taylor: Does the hon. Gentleman agree that the numbers of long-serving police officers leaving at present give cause for concern when we have an increase in violent crime? In view of the reasons for leaving the force given by those who left last year, can the Minister give an assurance that the greatly increased productivity, as a result of unit beat policing and other factors will be taken fully into account in the September pay review?

Mr. Buchan: All factors will be taken fully into account. It is a cause for certain satisfaction, although I do not want to make too much of it, that the total number of police officers has increased enormously—105 of these were men—and that of those who left there has been a larger proportion because of retirement rather than resignations. Both those facts are cause for congratulations to the Government and the police authority.

Mr. Lawson: Will my hon. Friend explain why there is so much talk about the shortage of police constables when we know that over the past 10 years the number in Glasgow alone has increased by nearly a quarter?

Mr. Buchan: That is true. The ratio of police to population has increased enormously, as my hon. Friend said. I take it that one of the reasons for the continued anxiety about numbers is the crime situation. I am determined to push up the numbers in order to deal with that situation.

Mr. MacArthur: Does the Minister agree that one of the best aids to the recruitment which we so much need would be for the Government to show greater understanding of the problems confronting the police in their fight against crime? Does he agree that a good start would be made if the police were given powers to search where the possession of an offensive weapon is suspected?

Mr. Buchan: I sometimes think that I should provide the hon. Gentleman not only with that, but with a gramophone needle. We have gone over this many times in the past six months. We must try to restore confidence, which some hon. Members opposite have sapped in the City of Glasgow by the continual reference to the inadequacy of police


powers. There is no inadequacy of police powers. That is what we should be emphasising if we are concerned about dealing with crime rather than making political points.

Juvenile Offenders (Remand Accommodation)

Mr. Hannan: asked the Secretary of State for Scotland what plans he has for dealing with the inadequate accommodation available for juvenile offenders remanded by the courts pending further reports.

Mr. Millan: I would refer to the reply which my right hon. Friend gave to the hon. Member for Glasgow, Cathcart (Mr. Edward M. Taylor) on 26th June.— [Vol. 767, c. 85–86.]

Mr. Hannan: In view of the continuing difficulties of the courts in remanding young people to appropriate accommodation before they are tried, would not my hon. Friend now consider what some of us have thought for a long time, that, except for the serious cases, many of these young people should be restored to their homes for their parents to look after them until such time as the case arises in court?

Mr. Millan: I certainly do not think that children should be remanded in custody unless it is essential. We are increasing the provision, as my hon. Friend will see if he looks at the previous Answer, and with the provisions of the new Social Work (Scotland) Bill coming into operation for dealing with young people, there will also be a change in emphasis in the methods of dealing with them.

Cullingworth Report

Mr. Hannan: asked the Secretary of State for Scotland if he will now announce his decisions in respect of the recommendations of the Cullingworth Report.

Dr. Dickson Mabon: My right hon. Friend regrets that he cannot yet announce decisions.

Mr. Hannan: While I appreciate the complexities of the contents of the Report, which are now aggravated by recent storms, may I ask my hon. Friend to give an assurance at least that the White

Paper will be published before we rise for the Summer Recess?

Dr. Mabon: I appreciate my hon. Friend's concern and his point about storm damage. I know that he understands the difference between the Dennington Report, on which there has been a White Paper, and the Cullingworth Report. I cannot give an assurance, but I hope that we shall publish a White Paper before we rise for the Summer Recess.

Mr. G. Campbell: Does the hon. Gentleman realise that, since a White Paper for England and Wales was published in April, it is very necessary to produce one soon for Scotland? Is he giving special consideration to recommendations 23 and 25 on the need for reasonable rents or for grants for repairs?

Dr. Mabon: We are giving consideration to all the recommendations, including those mentioned by the hon. Member. However, I should not think that these were the principal recommendations of the Report as distinct from those in the Dennington Report. I should have thought that the replacement of houses was much more important. I hope that we shall be able to issue a White Paper soon.

Local Authority Houses (Allocation)

Mr. G. Campbell: asked the Secretary of State for Scotland what action he is taking on the Kay Committee's Report on the allocation of local authority houses.

Dr. Mabon: The Scottish Housing Advisory Committee has recently considered strong local authority objections to detailed Government control of allocation schemes, and has recommended my right hon. Friend to proceed by issuing advice to local authorities about the policy they should adopt in future. He has accepted this recommendation, and a circular wil go out as soon as possible.

Mr. Campbell: I am glad to hear that the Government have accepted the recommendation that there should not be tight central control over this matter. As it is a subject which is of great concern to many people in Scotland, will the Secretary of State for Scotland soon give


an indication of the Government's views on the Committee's recommendations?

Dr. Mabon: When the circular is published it will be seen that we have covered virtually all the 28 conclusions in the Report in one way or another. We hope that local authorities will observe the circular in the spirit in which it is issued.

Mr. Younger: I welcome what the Minister has said about the Report, but will he bear in mind that there is perhaps no single aspect of local authority administration, in spite of the best efforts of officials, which gives more heartburn to people on housing lists? Will he ensure that when they are published his arrangements make allowances for people who have to change their homes on redeployment but cannot change their authorities at the same time?

Dr. Mabon: As a Member of Parliament who has represented an industrial town for 13 years, I endorse the hon. Gentleman's first remark. I am only sorry that it has taken past Governments as well as the present Government so long to get there, but now that we have got there, let us hope that these two points will be met.

Food (Production and Imports)

Sir C. Osborne: asked the Secretary of State for Scotland what proportion of the food consumed in Scotland is produced in Scotland; and what is the estimated cost of the imported food.

Mr. Buchan: I regret that this information is not available.

Sir C. Osborne: Why it is that the Scottish Office is so incompetent that it does not know what is happening in Scotland? This is the second Answer in which the Minister has said that he does not know what is happening. If we English Members of Parliament are to understand the validity of the demand for home rule for Scotland we are surely entitled to know whether Scotland can feed itself and earn enough money to pay for its raw materials. Why cannot we have the information?

Mr. Buchan: One simple reason is that I am more concerned about making two blades of grass grow where one did

before instead of having two unproductive bureaucrats where there was one before. The Question requires statistical information, and this would involve not only the Scottish Office but other Departments. The real answer is to make sure that the Scottish resources are used to produce the required agricultural and other commodities. We are broadly self-sufficient in beef, lamb, potatoes and milk, but we have to import certain other commodities, such as cereals and butter.

Dr. Miller: While I appreciate that my hon. Friend cannot give the figures, will he confirm that the rumour that haggis is being imported from Japan is completely without foundation?

Mr. Buchan: I can confirm that absolutely.

Mr. Stodart: Is not the hon. Gentleman doing his right hon. Friend less than justice? When the production figures are available from his Department together with the figures of consumption per head from the Ministry of Labour, what is the difficulty about matching the two and giving an answer of this kind?

Mr. Buchan: The hon. Gentleman, of all hon. Members, should know the answer. We have been guided to some extent by a very fine article that he wrote in the last few months. One of the reasons is that there is no control within the United Kingdom by means of customs barriers and so on, and I hope that there never will be this kind of control. Also, there is not a direct proportional intake of various food imports into Britain as a whole. There are good reasons why it is difficult to get the figures analysed without creating an army of bureaucrats to do it.

Mr. Willis: Is it not true that Scottish industry has better records in exports than English industry has? If so, why does the hon. Member for Louth (Sir C. Osborne) need to worry about imports of food and raw materials into Scotland? We do more than our share in paying for them.

Mr. Buchan: I am not responsible for the worries of the hon. Member for Louth (Sir C. Osborne). It is true that in certain commodities we have a good export record—including, by the way, to England.

Land Commission

Mr. G. Campbell: asked the Secretary of State for Scotland how much land in Scotland has been acquired by the Land Commission.

Dr. Dickson Mabon: None as yet, but the Commission has concluded a bargain for the purchase of a site of 12 acres, and has published a draft compulsory purchase order for another site of 52 acres. Agreement has also been reached with Renfrew County Council that the Commission will acquire on its behalf about 600 acres at Erskine.

Mr. Campbell: As the Land Commission is doing so little in Scotland, what is the point of its undertaking any operations there?

Dr. Mabon: I am surprised that the hon. Gentleman, in view of the Answer that I have given, should have asked that. He obviously prepared his supplementary question beforehand. The first appointed day under the Act was 6th April, 1967. I have given the hon. Gentleman the facts as they are up to date. Considering that the Land Commission has had to gather together the information about the land situation in consultation with local authorities, builders and developers, I think it has done reasonably well.

Mr. W. Baxter: Can my hon. Friend tell the House how the Land Commission is proposing to dispose of the land that it is acquiring? Will it dispose of it by highest offer, auction or gifts to builders?

Dr. Mabon: I appreciate the point that my hon. Friend is trying to make in reference to the recent circular. I suggest that he should put down a Question about this—and then I will give more details—or write to me. The 12-acre site is for industrial development. The 52-acre site at Killearn, Stirlingshire, is primarily for private housing. The 600-acre site is for mixed private and public development, mainly private, in the new town.

Publicly-Appointed Committees (Women Members)

Mr. Rankin: asked the Secretary of State for Scotland what representations he has received about the lack of female representation on the various ad hoc com-

mittees appointed by him to serve in Scotland; and if he will make a statement indicating his policy on the matter.

Dr. Dickson Mabon: I would refer my hon. Friend to the replies given to the hon. Members for North Angus and Mearns (Mr. Buchanan-Smith) and Edinburgh, South (Mr. Clark Hutchison) on 11th June, to my hon. and learned Friend the Member for Aberdeen, North (Mr. Hector Hughes) on 12th June, and to the hon. Member for Aberdeenshire, East (Mr. Wolrige-Gordon) on 26th June. —[Vol. 766, c. 32; Vol. 766 c. 238–9; Vol. 767, c. 82–3.]

Mr. Rankin: Is it true that the number of women appointed to Ministerial posts in this Government has been greater than in any previous Parliament? Is that also true of the posts which lie in the preference of the Secretary of State for Scotland? Is my hon. Friend aware that many women's organisations in Scotland believe that the tendency which has been shown in Government appointments is not recognised in appointments made by the Secretary of State to ad hoc committees?

Dr. Mabon: I believe that what my hon. Friend suggests about Government appointments is true, although I could not be certain. I should have to look it up. I take this opportunity, as I have done on previous occasions and in letters to individual hon. Members, to say that there is no discrimination against women in appointments referred to by my hon. Friend. We accept suggestions for appointments on the basis of equality of the sexes and without discrimination. But I take the point that some women's organisations feel that there is discrimination and I should like to do all I can to relieve them of that misunderstanding.

Mr. Noble: Will the Minister of State make it clear that he does not accept the imputation in the supplementary question of the hon. Member for Glasgow, Govan (Mr. Rankin) that the disaster of this Government is due to the number of women members of it?

Dr. Mabon: I deeply resent that suggestion.

Mr. Russell Johnston: While accepting that there is probably need to evaluate female representation better, may I ask


the hon. Gentleman whether he will assure us that he cannot accept the suggestion of a fixed proportion of female representation on ad hoc committees and that appointments will be purely on merit?

Dr. Mabon: Exactly. There is no question of fixed proportions. People are judged on their merits. That is the real meaning of true equality of the sexes.

Prisons, Borstals and Approved Schools

Mr. Buchanan: asked the Secretary of State for Scotland what are his plans for increasing the number of places available in Her Majesty's Prisons, borstals and approved schools in Scotland.

Mr. Buchan: This year my right hon. Friend hopes to provide 430 additional places in Scottish penal establishments, 270 in new buildings and 160 by reallocation within existing accommodation. The use of hutted camps, now under consideration, may add up to 450 places. Further plans include three new establishments, with 1,000 places, to be completed in the early 1970s.
Two new approved schools for boys are to be provided and two others enlarged: some decline in places for girls is likely. Altogether some 158 additional places are planned in that sector for the period up to 1970.

Mr. Buchanan: We know that my hon. Friend, because of previous inactivity, has a tremendous backlog to overtake. Are the plans being pushed forward fast enough to overtake the position before it is too late, because conditions in prisons, borstals and approved schools are getting to a dangerous stage of overcrowding?

Mr. Buchan: I am glad my hon. Friend appreciates the position in which I find myself. The long wasted years in the 1950s have left me with a very difficult position. I feel that very strongly, as those who have visited some of our prisons will know. We are pushing ahead as fast as possible. We are awaiting the report of the public inquiry into the most publicised project, at Bishop-briggs.

Mr. Wolrige-Gordon: Is the hon. Gentleman, aware that I regret very much the need for expansion of the number of

places for people of this kind? What effect will this increase have on the overcrowding in many of our prisons?

Mr. Buchan: This will depend on what happens in relation to intake. It would be difficult to predict in that connection. I hope, as we all do, that conditions will improve as a result.

Mr. Buchanan: asked the Secretary of State for Scotland what proposals he has for making the conditions of service of employees in Her Majesty's Prisons, borstals and approved schools in Scotland sufficiently good to attract sufficient staff of the necessary qualifications and calibre.

Mr. Buchan: A satisfactory level of recruitment to the prison service and approved school staffs has been maintained in recent years. The career structure of the prison service is being improved by the introduction of the grade of senior officer following the Mountbatten Report.

Mr. Buchanan: I thank my hon. Friend for that reply and appreciate the fact that our minds are as one about the urgency of recruiting to get the type of staff required for this work.

Mr. Buchan: Yes, Sir.

Drug Addicts

Mr. Brewis: asked the Secretary of State for Scotland what is the present number of drug addicts known to his Department.

Mr. Millan: The number of addicts in Scotland who have been notified to date under the Dangerous Drugs (Notification of Addicts) Regulations is 16.

Mr. Brewis: While being very pleased that the number is so small, may I ask whether the hon. Gentleman is taking action to bring to the notice of the schools the great danger of drugs?

Mr. Millan: This matter is under active consideration but I am glad to say that, so far, the problem is still a very minor one in Scotland. All our efforts are bent towards maintaining that position.

Mr. Hugh D. Brown: While agreeing with the Minister of State's statement


earlier that Glasgow is not the whole of Scotland—we accept that with our natural modesty—in all this furore and examination being made into crimes of violence, would the Scottish Office at least put the other side of the coin in the sense that drug taking is not a problem there, unlike the case in most other major cities?

Mr. Millan: That is quite right. I hope that this point will be noted by all those concerned about the position in other directions in Scotland. At least we have managed to contain this problem.

Police Crime Squad (Commander)

Mr. Brewis: asked the Secretary of State for Scotland when he expects that a chief officer for the Scottish police crime squad will be appointed.

Mr. Buchan: The commander of the Scottish Crime Squad cannot be appointed until the agreement establishing the squad has been acceded to by all the parties concerned. Under the agreement the appointment will be made by a committee of chief constables subject to the approval of a committee of police authority representatives and my right hon. Friend.

Mr. Brewis: In view of the extreme seriousness of the crime problem, will the hon. Gentleman do his best to expedite the agreement to get the squad going?

Mr. Buchan: Yes, Sir. I take this opportunity once more of inviting those authorities which have not yet acceded to give the matter most urgent attention so that we can set up the squad as soon as possible.

Selective Employment Tax

Mr. Buchanan-Smith: asked the Secretary of State for Scotland what further representations have been made to him regarding the refund of Selective Employment Tax to employers in hotels in certain parts of Scotland; and what reply he has made.

Mr. Bruce-Gardyne: asked the Secretary of State for Scotland what is the total number of representations which he has received to date regarding the proposed refund of Selective Employment

Tax to employers in hotels in parts of Scotland; and how many of these representations have favoured and opposed this proposal, respectively.

Dr. Dickson Mabon: My right hon. Friend has received 49 representations about this matter, all suggesting the inclusion of further areas in Schedule 17 of the Finance Bill. The replies sent indicated that the matter would be further considered, and the hon. Gentlemen will be aware of the Amendments to the Bill put down by my right hon. Friend the Chancellor of the Exchequer, which would include all these areas.

Mr. Buchanan-Smith: Whilst welcoming the Government's admission of error and their attempt to rectify the anomalies in the Finance Bill since bowing to representations made from this side of the House and by hoteliers throughout Scotland, may I ask the hon. Gentleman to see whether he cannot extend the refund of the S.E.T. to restaurants as well as hotels, which would be of interest to the tourist industry?

Dr. Mabon: The Government are open to representations on many subjects and are willing more readily to accede to them than were the previous Government. I would not agree that this change has been due to the intensity of the Opposition. Rather it has been due to the generosity of the Government. We have considered this carefully in view of the representations made and look forward to the debate we shall have later.

Mr. Bruce-Gardyne: Pleased as we are with these belated concessions, is the hon. Gentleman aware that they only create further anomalies? Is it not outrageous that the House should be given no opportunity to discuss the way these concessions have been granted at any time during the Budget debates?

Dr. Mabon: I am sorry that the hon. Gentleman was not able to be present to discuss the matter when it arose. No doubt he will make that clear to his constituents at the appropriate time. We have carefully considered this matter and have made substantial concessions, for which I know the hon. Gentleman has expressed gratitude.

Mr. Steele: While welcoming my hon. Friend's remark that the Government


are open to representations, may I ask him to note that Loch Lomond is still outwith the concessions? Can he arrange for my right hon. Friend the Secretary of State to add his name to my Amendment to the Finance Bill?

Dr. Mabon: That point has been noted, but I do not think that my hon. Friend's suggestion can be acceded to.

Sir F. Maclean: Can the hon. Gentleman explain the continued omission from the list of exemptions of hotels in areas served by the labour exchanges of Ardrossan, Largs and Stevenstone?

Dr. Mabon: This is because the refunds are not being made in areas catering primarily for day trippers.

Mr. Stodart: Is the hon. Gentleman aware that justice will not have been done until the greatest tourist city in Scotland has been included—Edinburgh?

Dr. Mabon: I did not quite catch the name of the city.

Mr. Bruce-Gardyne: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the reply, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest opportunity.

British Standard Time

Mr. Buchanan-Smith: asked the Secretary of State for Scotland what further representations he has had regarding the introduction of British Standard Time; and what reply he has sent.

Mr. MacArthur: asked the Secretary of State for Scotland what further representations he has received about the proposal to introduce British Standard Time; and what reply he has sent.

Mr. Buchan: Since my right hon. Friend's Answer to the hon. Member for South Angus (Mr. Bruce-Gardyne) on 25th June he has received three representations against British Standard Time from the Association of County Councils, Inverkeithing Town Council and the Scottish Division of the Headmasters' Conference.
All these representations have been acknowledged but no other reply has been sent except where information was specifically requested.—[Vol. 767, c. 66–7.]

Mr. Buchanan-Smith: In view of the massive opposition in Scotland to the introduction of British Standard Time, even though the Bill has been steamrollered through Committee, will the Minister, even at this stage, go back to his right hon. Friend and get him to tell the Cabinet that for the sake of Scotland this proposal must be dropped now?

Mr. Buchan: Far from being steamrollered through Committee, a substantial development has taken place in the Bill. That is to say, it has been decided that it would be better to see what are the effects in practice. It has been decided to institute a three-year experimental system. I advise the hon. Gentleman to wait to see how it works out.

Mr. MacArthur: Is not the hon. Gentleman aware that the alleged benefit of this new system is highly questionable and that in Scotland the proposal is contrary to the wishes of the people and also totally contrary to commonsense? Will he not recognise that the only proper course left to the Government is to remove the proposal altogether and at last have some respect for the wishes of the Scottish people?

Mr. Buchan: It depends on what is meant by the Scottish people. If the hon. Gentleman had consulted his friends in the Scottish Confederation of British Industry, he would have discovered that it was one of the bodies which approved the system, as were the Scottish T.U.C. and the Scottish Council for Development in Industry. It is not so simple as the hon. Gentleman suggests. A number of county councils in the initial stages were not opposed to the scheme. I think that it is correct to have a three-year experiment and see the result. There are certain advantages to Britain as a whole and certainly to Scotland as an exporting country, and at least we should try the system as an experiment.

Mr. Heffer: Is my hon. Friend aware that there is concern not merely in Scotland, but in other parts of the British Isles? Is he aware that there is deep concern in the building industry among both employers and operatives? Can he make representations to his right hon. Friends to have the experimental period reduced from three years to one year, as I suggested on Second Reading.

Mr. Buchan: I recognise that this is a problem which is not confined to North of the Border. The voice of Liverpool has now been expressed and I am glad to hear that there is this broadening out of what is sometimes a parochial dispute. However, a one-year period would not give us the opportunity to decide the merits or otherwise of the scheme. I know the North. I was brought up in the Orkneys and I went to school in the dark and came home in the dark—[HON. MEMBERS: "He is still in the dark."]—for many months of the winter. [Interruption.] My hon. Friend has stolen my punchline. I was about to say that they have not yet seen the light down here.

Mr. Adam Hunter: Is my hon. Friend aware that Fife County Council protested some months ago against the introduction of British standard Time, but has now waived its protest and is prepared to give the experiment a one-year trial before taking any further action?

Mr. Buchan: I am glad to have that point brought forward. People are beginning to consider this seriously and the next move will be when we have seen it working in practice.

Educational Development Programme

Mr. MacArthur: asked the Secretary of State for Scotland if he will make an early statement setting out the details of the educational development programme necessary to meet the requirements of 1972 when the school leaving age is to be raised.

Mr. Milton: The detailed preparations for the raising of the school leaving age are matters for education authorities and vary from area to area. So far as the Government's policy is concerned I would refer the hon. Gentleman to the reply given to my hon. Friend the Member for Glasgow, Govan (Mr. Rankin) on 6th March.—[Vol. 760, c. 86–7.]

Mr. MacArthur: Will not the hon. Gentleman recognise, however, that there is urgent need for a clear statement from the Government? Will he give an undertaking that such a statement will be made before the end of this year in order to remove the confusion and lack of confidence created by the Govern-

ment's incessant and contradictory changes in education policy? Does he not consider that the raising of the school leaving age will be jeopardised yet again unless a definite and clear long-term plan is announced and adhered to?

Mr. Speaker: Long questions and long answers mean fewer questions and fewer answers.

Mr. Millan: That question was not only long, but highly inaccurate and extremely unspecific. We have made our position on school building, on the curriculum and on the supply of teachers clear on many occasions and we shall continue to reaffirm those points as occasion requires.

Mr. Maclennan: Can my hon. Friend say whether the Sutherland education authority's proposal for the downgrading of Dornoch Academy, which his right hon. Friend recently approved, took into consideration the expansion of places necessary in 1972, and is he aware of the great concern felt in the area about this move?

Mr. Millan: I am aware of the controversy which there has been about this proposal, but as I understand the position it will certainly be possible to provide the places which are required in good time in the schools in the area both at Dornoch and Golspie.

Mr. MacArthur: On a point of order. In view of the unsatisfactory nature of that reply, I beg to give notice that I shall raise the matter on the Adjournment at the earliest opportunity.

North-East Scotland

Mr. W. H. K. Baker: asked the Secretary of State for Scotland when he now expects to receive the report of Professor Gaskin on the North-East of Scotland.

Dr. Dickson Mabon: In the late autumn. Publication will be arranged thereafter.

Mr. Baker: Is the Minister of State aware that there have been alarming reports of continuing depopulation in the area Can he say what, if any, plans the Scottish Development Department has made for infrastructure working in the area in future?

Dr. Mabon: There have been alarming reports for the last 15 years, if not longer. The study is specifically aimed at arresting depopulation and trying to achieve regeneration of the North-East and we hope that Professor Gaskin's plan will provide us with suitable indications of how we should proceed.

Mr. James Davidson: Will the Minister of State consider setting up a North-East development authority to implement the recommendations of Professor Gaskin's report when it comes out in the autumn, which is when it is due and when, I am assured, it will be on schedule? This suggestion has been pressed for a long time. Will the hon. Gentleman give an assurance that he will reconsider it?

Dr. Mabon: That may help, but I should like to see the report first. I agree with the Aberdeen Press and Journal that Aberdeenshire is ripe for development.

Mr. Dewar: Will my hon. Friend give an assurance that this report will deal with the problems which will arise from Aberdeen's exclusion from Schedule 17 of the Finance Bill, a decision greeted with dismay in my constituency and which, in view of the city's heavy dependence on the tourist trade—a far heavier dependence than that of other Scottish cities—seems difficult to justify?

Dr. Mabon: I sympathise with my hon. Friend's concern, but by no stretch of the imagination could Aberdeen be called a rural area. However, I assure my hon. Friend that Professor Gaskin must take into account these and other factors relevant to the needs of the area.

Mr. Wolrige-Gordon: asked the Secretary of State for Scotland what further plans he has to assist the development of local economy in the North-East of Scotland; and if he will make a statement.

Dr. Dickson Mabon: The whole of the North-East is a development area, with all the benefits for economic expansion which that status attracts. Professor Gaskin's study should show how best the region can exploit these benefits.

Mr. Wolrige-Gordon: Is the hon. Gentleman aware that the practical developments in the economy of the area in the last few years have been the fruit of the

work done before the present Government took office, and that making the whole of the country a development area was a retrograde step for local development in this kind of district? Will the Government reconsider their policy in this respect?

Dr. Mabon: I do not accept the first part of the question for one moment. In the years 1965 and 1966 1,100 new jobs were potentially provided by 705,000 sq. ft. of new factory space, which is not a bad improvement on past record. I agree that that is not enough and Professor Gaskin's study must help us on the way to even more.

Mr. Hector Hughes: In the context of this Question, what does "local economy" mean? Does it include franchise, finance and education and what else?

Dr. Mabon: That is a question which should be addressed to the hon. Member for Aberdeenshire, East (Mr. Wolrige-Gordon), but to answer on his behalf, "Yes".

Local Government (Scotland) Act, 1966

Mr. W. H. K. Baker: asked the Secretary of State for Scotland what proposals he has for amending the Local Government (Scotland) Act, 1966.

Dr. Dickson Mabon: If the hon. Member has in mind the formula for distributing the rate support grants, this is at present under consideration by a working party which includes local authority representatives. Any alterations would be effected by the next Rate Support Grant (Scotland) Order later this year.

Mr. Baker: May I inform the hon. Gentleman that the hon. Member for Banff did not have that point in mind? Is he aware that the Scottish Development Department has sent a circular to local authorities advising them not to rate unoccupied properties because the owners are pulling them down? Would he not have been better advised to listen to the Opposition's Amendment to exclude unoccupied properties from the rating proposals of the new legislation?

Dr. Mabon: The hon. Gentleman is confusing the issue. He ought to put down


a separate Question, or write to me about it, and I shall be happy to give him a considered reply.

EXPORT ORDER TO GREECE

Sir K. Joseph: (by Private Notice) asked the President of the Board of Trade whether he will make a statement on the loss of an export order to Greece.

The President of the Board of Trade (Mr. Anthony Crosland): I have had no confirmation of the loss of any export order to Greece. It would be in the interests of neither country to allow political differences or misunderstandings to affect our trade. Indeed, I have just heard that the Director-General of the Press Ministry in Greece has today denied that the Greek Government had decided to cancel Government contracts with the British firms as a result of recent remarks made about the Athens régime.

Sir K. Joseph: Is it not a fact that the representatives of one firm have been informed that an order that was due to be signed this week has been cancelled as a result of the comment by the Prime Minister in the House last week? Will the Government do all they can to rescue this and any other order?
Does the right hon. Gentleman agree that condemnation by the Prime Minister of this or any other Government in the context in which it was used last week is most unlikely to do any good to anyone and is most likely to endanger British jobs and trade?

Mr. Crosland: On the facts of the case, what appears to have happened was that an official in the Greek Ministry of Co-ordination spoke on the telephone to the Greek agent of the firm concerned, and informed him that this might happen—that is the action to which the right hon. Gentleman has referred. There has been no confirmation of this at all, either to the British Embassy in Athens, to whom I have just spoken, or to the firm concerned in this country, to whom I have also just spoken.
I have now heard that the Director-General of the Press Ministry in Greece has denied that any cancellation of contracts is in progress.
As to the latter part of the right hon. Gentleman's question, it is quite wrong to suppose that people in this country who feel strongly about political régimes, whether in Greece or in Communist countries, will not say so, or to suppose that they should not say so. What is important is that all countries who have political differences with each other should strive hard not to let those differences affect mutual trade.

Mr. S. C. Silkin: Can my right hon. Friend confirm that the Government will not be deterred by any threat of economic sanctions from saying what is right about the actions of dictators and dictatorships, whether of the Left or Right? Furthermore, will he confirm that, if threats of economic sanctions of that kind are made, the Government will not hesitate to use economic sanctions in return?

Mr. Crosland: The Government will continue to make known their political views on régimes, whether in Greece, Communist China, Cuba, or South Africa—

Dame Irene Ward: Or Russia?

Mr. Crosland: They will make them known perfectly freely. But we still take the view, as do other countries concerned, that, although we have acute political differences with each other, nevertheless, it is not in the interest of either country to restrict mutual trade.

Sir F. Bennett: In view of the Minister's apparent impartiality on this question, can he remind the House when the Prime Minister last described one of these Left-wing dictatorships, such as those in China, Cuba, or Russia, as "bestial"? Would he care to give to the House some form of criteria on which we can judge whether we should or should not do our best to sabotage Britain's export drive?

Mr. Crosland: I understand that when my right hon. Friend the Prime Minister, on a previous occasion, in December of last year, referred to the régime in Greece he referred to"the barbarous methods in use in Greece today." My right hon. Friend the Prime Minister has told me that in answering a supplementary question on Tuesday of last week he had intended to repeat his earlier phrase. If it is of any satisfaction to the hon. Member I am perfectly happy, and so would


any member of the Government be, to use the same word, "barbarous", to apply to what is happening now in a number of Communist countries throughout the world.

Mr. John Fraser: Would my right hon. Friend confirm that it never has been, and never will be, the policy of the Government to trim and mince their words to appease dictators who are in breach of fundamental human rights? Would he also agree that the concern of the Opposition for commercial considerations, above human rights, makes them worthy competitors of Judas Iscariot?

Mr. Crosland: I can confirm what my hon. Friend said in the first part of his supplementary. As to the second and more theological part of his supplementary, I would only say that one would deduce from the Opposition's attitude today—but I imagine incorrectly, as the Leader of the Opposition, from his own experience at the Board of Trade would confirm—that because they as a party, just as we as a party, hold strong views about the internal régime of Communist countries, they would not take steps to increase trade with those countries. If that is their view, it is not one which we share.

Mr. Tapsell: Does the right hon. Gentleman understand that the House is very ready to accept the Prime Minister's apology for his incompetence?

Mr. Whitaker: Would it not be a black day for the House of Commons if commercial blackmail were suggested by any hon. Member as a reason for anyone in the House not denouncing injustice in any country, especially in the country concerned, where it has been attested by the Council of Europe?

Mr. Crosland: It should remain, I would have thought, the view of both parties, certainly of this party, that we ought to continue to make our views absolutely clear about the nature of régimes with whom we disagree, but that, nevertheless, we should continue trading with them.

Sir G. Nabarro: Earlier, the right hon. Gentleman referred to "a firm". Is he aware, for example, that among Press reports this morning the Daily Express, in its righthand column on the front page, referred to both Rolls-Royce and

Metro-Cammell? Has the right hon Gentleman consulted both firms individually and obtained their assurance, individually, that no order which they have had on their books has been cancelled as a result of the Prime Minister's speech?

Mr. Crosland: I am sure that the hon. Gentleman will be aware that Rolls-Royce and Metro-Cammell are jointly concerned with this contract. We have checked with the joint organisation of the two firms concerned.

Mr. Hooley: Does the Minister agree that it would be most unwise for the Greek régime to compound the folly of political behaviour by this kind of commercial folly, should it pursue the line suggested?

Mr. Crosland: It would be most unwise of the Greek régime, but, as I said in my Answer, there is no evidence that it has any such intention. Were it to carry out such an intention, it would be unwise, because it would undoubtedly start other countries pursuing their trade relations in accordance with their political views. That would be a very foolish thing for any Government to do.

Sir K. Joseph: Would the right hon. Gentleman accept that on this side of the House we think that he has made a very good job in making the best of the ill-judged remark by the Prime Minister? Will he also accept that we entirely agree with freedom of trade and freedom of expression, but still think that it was very ill-judged of the Prime Minister, unnecessarily and ineffectively, to make that sort of comment?

Mr. Crosland: As the right hon. Gentleman is in favour of freedom of expression, I hope that he is in favour of this in Greece, as well as in Britain. Subject to that, I make it clear again that what Her Majesty's Government want, despite our political differences, is an increase in our mutual trade with many countries of the world with whom we have profound differences.

Mr. Heffer: Is my right hon. Friend aware that the Council of Europe sent a delegation to Greece and that the evidence that it came back with made it clear that there are bestial practices in Greece? Is he also aware that the Conservatives, at the meeting of the Council


of Europe, did everything possible, by their manoeuvring, to keep this matter quiet? It is amazing how the Opposition always defend Fascist and reactionary organisations and régimes.

Mr. Crosland: I am aware that this matter is currently being considered by the European Commission of Human Rights. There are Questions down to the Foreign Secretary on Monday of next week on the wider political considerations. I cannot comment on how Conservatives behaved at Strasbourg, because I regret to say that I was not there.
I must make it clear to my hon. Friend that, whatever view he and I may take of this régime, it would be wrong for either Government to regard that view as a reason for inhibiting proper trade between us.

Sir C. Osborne: Is the right hon. Gentleman aware that both sides of the House agree that political differences should not be allowed to impede trade? Would he not also agree, however, that it was rather unfortunate for the Prime Minister to use such extravagant terms? —[HON. MEMBERS: "They were not extravagant."] Would the right hon. Gentleman like to tell the House the definition in the dictionary of the word which was used? Is it not a most offensive word? If we insult everybody with whom we do not agree, will not our trade go down to nothing?

Mr. Crosland: As I know very well, the hon. Gentleman is not behindhand in occasionally using quite strong language about people or bodies he happens to dislike. He is rightly, very closely concerned with the development of Anglo-Soviet trade, despite the political views which he no doubt holds about that country. I have already answered a question about the precise language used by the Prime Minister.

rose—

Mr. Speaker: Order.

Orders of the Day — FINANCE BILL

As amended (in the Standing Committee), further considered.

[3RD ALLOTTED DAY]

3.42 p.m.

Mr. Speaker: I have posted up the amended list of selected Amendments. It contains one or two additions. The first new Clause which we are to discuss is new Clause 36, with which we shall take new Clause 42, "Old age relief and relief for blind persons", new Clause 113, "Tax allowance for blind persons", and Amendment No. 93.

Sir Gerald Nabarro: On a point of order. So that there is no misunderstanding later in the debate, may we conclude that, if necessary, separate Divisions may be called on each or any of the new Clauses and the Amendment, for they are diverse in character, though loosely associated one with the other. One proposal deals with allowances for the blind only and not with allowances for other forms of disablement. May we therefore claim that any or all of the proposals may be divided upon?

Mr. Speaker: The hon. Gentleman can claim nothing. He may ask Mr. Speaker whether he is aware of the differences between the various Clauses and Amendments and whether he would be prepared to allow a Division on some of them. I have not yet been asked.

Sir G. Nabarro: I hereby ask you, Mr. Speaker, whether any or all of these proposals may be divided upon. I am so sorry that inadvertently I used the word "claim" instead of "beg".

Mr. Speaker: There is no need for the word "beg", either. I will consider the hon. Gentleman's request and let the House know later.

Sir G. Nabarro: Further to that point of order. You have ruled on many occasions, Mr. Speaker, that these requests should be made at the outset of the debate. You have just ruled that you will give a decision later in the debate. May I ask at what stage in the debate your decision will be given?

Mr. Speaker: I am sorry; the Chair will not be cross-examined by the hon. Gentleman. He has made a request at the beginning of the debate and Mr. Speaker has informed him that he will consider it and let the House know his decision in due course.

New Clause

TAX RELIEF FOR DISABLED PERSONS

In section 9 of the Finance Act 1962, as amended by section 10 of the Finance Act 1965, for the references to £100 and £200 respectively there shall be substituted references to £130 and £260 and these sections shall also apply to any other seriously disabled person, which means a person who is deaf, dumb or otherwise handicapped by loss of physical or mental faculty which is substantial and likely to be permanent.—[Mr. Worsley.]

Brought up, and read the First time.

Mr. Marcus Worsley: I beg to move, That the Clause be read a Second time.
The House will be grateful to you, Mr. Speaker, for allowing us to debate the new Clauses together because they all cover points relating to disability. The Minister of State seems to be in that situation; I hope that it is nothing serious.
This is the only chance which we shall have during the passage of the Bill to do something constructive to ease the burden on the mentally and physically disabled, with whom we all have sympathy. Clearly, there will not be debate across the Floor of the House about that sympathy; the debate will be about how to help them. In times of economic crisis, like the present, that in itself is no reason to exclude from our consideration subjects like the one dealt with by the new Clause. These people still deserve our sympathy and help through the Bill.
The new Clause has a double purpose. Some of the other Clauses which we are discussing relate to only one of these two purposes. We are proposing that, first, the existing blind person's relief should be brought up to date, and, secondly, the relief which is paid only to the blind should be expanded to a general relief for disabled people.
I wish to start by discussing the first of those two aspects, to which new Clause No. 113 is related. The figures

are simple. This relief was introduced in 1962 by the Conservative Government. Taking the base of 100 in January of that year, the cost-of-living index, which must be the indicator which we use in these matters, had risen in May this year to 124·9— 125 in round terms. The House will know how much of this increase has been the result of Labour Government and that the steps taken by this Government during the current year and earlier years have deliberately increased the cost of living.
We propose to increase the relief to £130, because we have no confidence whatever that the rise in the cost of living is likely to stop in the immediate future. Indeed, all the policies of the Governent make it absolutely certain that it will continue. To be precise, we should increase the relief to £125, but we have proposed the figure of £130.
When the Royal Commission on Taxation of Profits and Income recommended such a disability relief in 1954, it advocated that it should be not less than £100. As far back as 1954 it was thought that £100 was the absolute minimum. Here we are in 1968 and the £ is very much less valuable. Of course, if the Minister says now that he is quite happy to accept £125, I think it likely that my hon. and right hon. Friends will accept that with pleasure, but the point is that the relief introduced in 1962 has lost an appreciable part of its value. It is, after all, a relief not of very wide application, a relief confined to people who need it, and it is a relief, I must remind the House, which helps a category of people who are not currently helped through the National Insurance scheme—and that I shall return to in a minute.
There is an overwhelming case at least for preserving the real value of this relief for people who are, by definition, in need of help. So the case we make on this Clause is that, whatever else is done, it is only a matter of elementary justice that the relief should be increased to keep pace with the falling value of the £. Of course, I appreciate that these reliefs cannot be valid in successive Budgets; we cannot have a sort of sliding scale; but I do think, and I invite the Minister to agree with me about this, that when the figure has moved as far as this and the cost-of-living index has


risen 25 points there is an absolutely overwhelming case for a change.
The second object, to which, if the House will permit me, I should like to devote rather more time, of the Clause is to widen the application of relief. We feel that the time has come to build on the foundation laid by the Conservative Government in 1962, and to move at least some of the way towards a proper overall disability relief. I suppose that different forms of disability excite different amounts of sympathy in different people, but can anyone really argue that a blind person has any greater need of tax relief than, for instance, someone who suffers from multiple sclerosis?
One can enumerate the hard cases easily enough, but surely the fact is that blind people have been selected not because they are in greater need of this relief, but because they are easier to identify. I believe that if there is a case —and I believe there is a case, and certainly both sides of the House have accepted this for some years now—for blind relief, then there must also be a case for relief for other major disabilities.
I should like to quote from the Royal Commission to which I have already referred. It had this to say in 1954 on this matter, that
there are many kinds of disability … so severe that they modify the whole conditions of a person's life and impose upon him a constant levy of extra expense that may fairly be said to affect the taxable capacity of his income. … Our general conclusion is that grave disability ought to be the subject of allowance. It presents itself to us as a personal circumstance that sets apart those who suffer from it and directly affects their relative capacity to pay.
This, of course, is the criterion on which one must judge a tax relief. There is nothing in that about singling out the blind for special treatment. The Report makes a clear and overall case for a disability allowance across the board.
The Minister will, of course, realise that although we are discussing the question of tax relief, all these tax reliefs, or many of them, have, as it were, their mini-images in National Insurance. I refer, but only briefly, to the fact that many of us on this side of the House who have been pressing for some time for corresponding disability benefit have

made just the same criticisms about the present National Insurance scheme, that it helps certain limited forms of disability only; we have made of that scheme criticisms similar to those we are making this afternoon of the tax structure. I mention this because the same problem arises, and I should like to say a word about it.
There is, to begin with, of course, the problem of definition. I would certainly not wish to suggest to the House that this problem of definition is one which can be easily solved. Nevertheless, I should like to make one further quotation —and the House will be relieved to hear it is my last—from the Royal Commission's Report, because in paragraph 203 the Commissioners dealt with this point:
'"The difficulty reinforces the need to begin cautiously "—
as, of course, was done in 1962, though in a different way—
and to confine qualification to 100 per cent. disablement. But we feel at the same time that the difficulty is not insuperable and ought to be faced. Machinery of the kind that we have in mind does in fact exist, though created for the purpose of war pension administration; and some of the qualifications, e.g., blindness, do, as it were, prove themselves.
In other words, the Royal Commission, in considering this matter, thought that machinery should be established, and that there were precedents for the machinery, for making the kind of distinctions which we have in mind.
In our Amendment we have used the wording, as the Minister will recognise, of the industrial injuries scheme, and my hon. Friends, in the related new Clause 42, have used the industrial injuries scheme, and also the war pensions scheme, as the machinery for making this sort of decision. We feel that the time has come to move on this matter, that these words, which are well-established now, which have been in use and been in operation for 20 years, could be used as the machinery for making this distinction.
The Minister will, of course, know that the Government are currently carrying out a considerable survey into the whole question of disability. This we very warmly welcome. Such a survey is overdue, and must be valuable, but I hope that the Minister will not use this survey as an excuse for inaction on this matter. The survey will take a long time to complete;


it will take a long time to digest when completed. I do not believe that we can wait till the survey is fully completed. I believe that we have reached a stage for a real attack on this problem.
It is, after all, as I said earlier, the only way we can help those in work, and what can be more important in this field than to help those persons who can still keep in work? Naturally enough, many of these people find it difficult to earn high remuneration; others, of course, cannot succeed in finding work at all, but where there is a possibility of work surely that should be encouraged. So we do not believe that the kind of cash benefit that we have in mind for disability is an alternative to a tax relief of the character we are mentioning. On the other hand, we feel that it is something that will run together with it very well.
4.0 p.m.
I also hope that the Government will not use the classic argument for doing nothing, namely, to start talking about borderline cases. It is always easy to make a nonsense of almost any improvement by saying that there is a case on the borderline which produces hardship. There are always borderline cases which are difficult, but if we use this argument across the board we would have hardly any benefits and hardly any tax reliefs at all.
Surely the important thing is to tackle the substance of the problem and if, in the working of the scheme, there are found to be difficulties on the borderline, perhaps we can put them right later. However, this should not be an argument against any improvement in the scheme. If the Government can come forward with a better definition than we have succeeded in doing either in this new Clause or in any other new Clauses on the Notice Paper, we shall be only too delighted to accept it.
We are trying to establish two principles in this Clause. The first principle is that when a tax relief of this character has been allowed and, largely through Government policy, has become eroded, then it is time that the Government took action and accepted a variation in the rate of tax relief.
Secondly, the story which I have tried to unfold of the initial recommendation of the Royal Commission's Report for a disability tax relief, followed by the

introduction of a partial scheme in 1962, all adds up surely to an unanswerable case to widen this provision so that it covers the whole, or at least the greater part, of the disability sphere. This is what we urge the Government to do. This is why we have put down this Clause.

Mr. Speaker: I should like to announce that I have given consideration to the request of the hon. Member for Worcestershire, South (Sir G. Nabarro) that I might be prepared to allow a Division on some of these other grouped Amendments. I have given some thought to this and I am prepared to allow a Division on new Clause 42 when we come to it, if requested by the Opposition.

Mr. Julian Ridsdale: I welcome moving new Clause 42 standing in my name in conjunction—

Mr. Speaker: Order. The hon. Member may not move new Clause 42. He is speaking on the present Motion, but he may, however, talk about new Clause 42 as much as he likes.

Mr. Ridsdale: I welcome talking on new Clause 42 in conjunction with new Clause 36. If the Government are not able to agree and help on new Clause 36, I hope that at least they will realise that this Clause, to help the blind, is not so costly and will, therefore, go some way towards helping this very needy section of the community. The objective of new Clause 42 is to help a very small section of the community who are extremely hard hit by devaluation and inflation and, alas, cannot do anything to help themselves. This was brought home to me very much because of one special case with which I had to deal in my constituency. The cost is extremely small, but it would mean an extra £10 to £12 per year for those who are over 70 and those who are blind and whose income would be from about £700 to a maximum of £765 a year.
First, I will establish the facts, especially in view of the verbal gymnastics of the Financial Secretary to the Treasury when he replied to a Question of mine in the House in April. I asked:
Is it not a fact that the blind allowance is taken away on reaching the age of 70? 


The Financial Secretary replied,
That is not so."—[OFFICIAL REPORT, 2nd April, 1968, Vol. 762, c. 156.]
Yet, on 5th April, when I endeavoured to establish the facts and asked whether
he will seek to enable blind persons over the age of 70 years to be allowed both the blind allowance of £100 and age exemption relief against income tax",
the hon. Gentleman replied:
I do not think that it would be right to increase the income limits for age exemption to reflect particular allowances due to the individual concerned."—[OFFICIAL REPORT, 5th April, 1968; Vol. 762, c. 150.]
The facts are clear. At 70 age allowance comes into effect for everyone. The blind cannot have both age and blind allowance. The blind allowance ends at 70 years of age. After 70, the blind are still without the £100 concession. This then is the first question that I ask the Minister: why, when a person who has been receiving blind allowance, should it be taken away, especially when he needs it now far more than ever?
My hon. Friend the Member for Chelsea (Mr. Worsley) has spoken about the severe rise in the cost of living. This is a class in the community which cannot help itself. Surely help should go to those who need it most. Is not this equivalent, at a time of inflation, rising prices and devaluation, to a severe cut in pay? I hope that the House will show its humanity to this most needy section. I am sure it would be the wish of everyone in the country that something should be done for these people.
What would be the cost of this concession? I hope that the Minister will tell us. Does the Minister realise that I am not talking about rich men, but those hardest hit by inflation—people like General Post Office pensioners, railway super-annuitants, public service pensioners and anyone whose income adds up to between £700 and £750 a year, or under £1,000 a year, and whose misfortune it is to become blind. These are the people that I want to help. I hope that the Minister will not use the argument that help would go to a few rich blind people as well, because I am certain, if that was the case, that those people would be only too willing to forgo any of the advantages that they may gain.
The people I am talking about and whom I want to help have a National

Insurance pension of £385 and some other form of pension of about £300, plus possibly a little capital bringing in an additional £50 a year. They receive £665 a year free of tax. For the rest, nine-twentieths has to go to pay tax. On £700 a year I know that that £10, especially to the constituent whose case I have mentioned, will mean a great deal.
Therefore, I hope that the Minister will be able to give this concession.
I am grateful to you, Mr. Speaker, for saying that we might have a Division on this Clause. I know how much in human terms this means to this very needy section. I do not want to stress too much the rise in the cost of living and how much these people are affected, but in some constituencies the average income is anything between £500 and £i,000. These people, who are the hardest hit, should be helped as much as possible. I would like the Government to give every concession they can so that we can do it across the board. This may be too costly, but let the Minister realise that a concession is given until people reach the age of 70. To take it away then is inhuman. I therefore hope that the Minister will be able to give this help to those who are being hit hardest by inflation, and who cannot help themselves.

Dame Irene Ward: I am glad that these Clauses, which deal with a wide range of disabled people, are being discussed this afternoon. One of my regrets under the new method of dealing with Finance Bills is that discussions of this kind, which used to take place frequently under the old system, seem to have been almost entirely eliminated. I am, therefore, very grateful to my hon. Friends the Members for Chelsea (Mr. Worsley) and Harwich (Mr. Ridsdale) that we are able to discuss this problem in depth, because it is essential that it should be so discussed.
My hon. Friends have deployed the case admirably over the whole range of the problems involved, but I want to concentrate my remarks on one aspect only. If a person does not have the full use of his limbs, or suffers from ill-health, or is blind, or is unable to use his brain to the full extent, the problem of heating becomes one of the most important considerations in his life. If a blind person


makes every effort to fend for himself— and we all agree that the disabled have a splendid record of trying to help themselves—but finds that he is unable to move about and has great difficulties in coping with the rigours of our weather, he must have adequate heating to keep himself in reasonable comfort. When disabled people return home after having done a day's work, probably under difficult circumstances, they need the benefits of additional heating.
If it is proposed to increase the cost of gas, electricity, or coal, the proposal may be submitted to the Prices and Incomes Board, which, in its wisdom, may decide that the additional costs facing the nationalised industries justify the increases. In my part of the country we have an above-average number of retired people which includes an above-average number of disabled people. Most people cannot afford coal anyway, but disabled people find it extremely difficult to deal with it, particularly if they live in rather restricted conditions in flats. Violent increases in the price of gas and electricity have imposed enormous burdens on the disabled and the blind, and it is imperative that they should be helped by some form of tax relief.
4.15 p.m.
In this great country of ours we can take credit for many technological achievements. It is childish to say that we cannot establish an administrative machine to identify those who would be entiled to take advantage of the provisions of these Clauses. After all, the Government must know the number of disabled people being employed in any firm. They have to be identified by the employer to make sure that the firm is operating within the law. I have always felt that the answer about the difficulty of creating the necessary administrative machine was rather facile. The public will no longer accept that answer.
We have done a great deal to stimulate interest in the disabled and in the blind. A number of committees have been formed in the various regions, and blind people are well aware of the many pledges which have been given that extra money would be provided to help them. The right hon. Lady the Secretary of State for Employment and Productivity has promised to examine the question of equal

pay for equal work. If the proposal is implemented, the cost will be £600 million a year. What we are asking for will not amount to anything like that sum. What attitude can the disabled and the blind adopt if the Government say that they are prepared to consider a proposal which would cost £600 million a year, but are not prepared to consider a cause which is dear to our hearts? What attitude can they adopt if the Government cannot even say that they will examine the possibility of creating the necessary administrative machine? It will be much easier to do that than it will be for the right hon. Lady to negotiate with employers and trade unions on the question of the rate for the job.
Whenever I rise to support new Clauses or Amendments of this kind to Finance Bills I feel that we shall win, but somehow or other we never do, and this is most depressing. I have spent a great deal of my political life arguing with my party, and when we win the next General Election the first thing that I shall expect from my party is action. The Socialists can put that in their pipes and smoke it. We will smoke better pipes than the Socialist Party.

Mr. Speaker: Order. The only action that the hon. Lady can ask for at the moment is on the new Clauses.

Dame Irene Ward: What I want now is the acceptance of the Clauses. Hope springs eternal, and I have a feeling that perhaps the Minister will say that he will accept the Clauses with pleasure. I am certain that they cannot cost much money. The other day the right hon. Lady who runs the Ministry of Social Security announced that she would give £44 million to a section of the community which, she said, required additional benefit. I am not arguing about that; I have no doubt that that section deserves it. But many people deserve support from the Government in present circumstances, and if help can be given to one needy section of the community there is no reason why help cannot be given to this section, because if any section deserves our support it is this one.
I cannot think what I can do to persuade the hon. Member. As my hon. Friend the Member for Chelsea said, I hope that the Minister will not give us


all the old answers. If I were to sing, "Tell me the old, old story" it would be a shock to the House—

Mr. Speaker: It would be delightful, and it would be in order.

Dame Irene Ward: Thank you, Mr. Speaker.
I have lots of friends who tell me, "I should be delighted to have you come and stay with me, provided that you do not sing". Here I am staying, and I am not singing. I am warning the Minister, however, that unless we have a satisfactory answer today there will be such a wave of additional nausea against the Government that I hope it will blow him out of the seat that he is now occupying.
I am grateful to my hon. Friends for putting down these new Clauses. A great deal of self-restraint has been exercised by people who have worked so hard for this good cause over the years, because they have had so little opportunity, under the Bill, to discuss the needs of people who really need our support and help.
I give my support to the Clauses. I cannot believe that any Minister could be so lacking in humanity as not to accept them. Never mind what the Treasury says. I am sick of the Treasury. If some people from the Treasury would like to go round the country and speak to those who are interested in the disablement income groups and the blind, we should be happy to take parties of them round.
We are now to re-educate civil servants, and I suggest that the first group that we should deal with—which would be the easiest to re-educate—are the Treasury officials. Let them speak to the people who have been helping to sustain our economy under difficult circumstances. They will see that these people need and deserve our help. If the Minister would like any help with the Treasury officials he can count me in. I shall be delighted to take one in each hand and show them some of the problems of these people.
I hope that the Minister will not delay very long before saying "Well done". It would be wonderful for his side of the House. His party is split from top to toe. It would be a good thing for hon. Members opposite to be able to close their ranks on something which ought to unite both sides of the House.

Mr. John Pardoe: It is always a delight to listen to the speeches of the hon. Member for Tyne-mouth (Dame Irene Ward), even if it is difficult to follow them. She said that the first thing she would expect her party to do when returned to power would be to take action on this matter. I am sure that that could be the last thing she would get, but I shall be here to help her remind her party. [Interruption.] If I am not here nobody in the Conservative Party, apart from the hon. Lady, will remind it of this matter.

Dame Irene Ward: Oh, yes, they will.

Mr. Pardoe: Two issues are involved in these new Clauses. The first is an increase in the level of tax relief for blind persons. On the basis of the inflation that has taken place since the level was last fixed, only a few years ago, there is an unanswerable case for such an increase. I do not see how the Minister can refute that. I do not like to think of the problem that lies before him in trying to do so. Bearing in mind all the facts about the cost of living we known that the case is unanswerable, and I hope that the hon. Gentleman will accept it.
I am wholeheartedly in support of widening relief for the disabled generally, but I am not so wholeheartedly committed to increased tax relief for one section only. I should prefer to see the relief given right across the board rather than to a group. I hope that this idea is something that we shall move towards, partly because of the activities of certain groups and partly as a result of the investigation which the Government are undertaking.
It would appear that a principle has been established that where there is a case for tax relief for some group or other—whether it be a small or a large minority—there is also a case for a national income provision, within Ministry of Social Security terms, for the same group. We should accept that principle. If it is true that it costs a disabled standard rate taxpayer more than an able-bodied standard rate taxpayer to live, and, therefore, there is a case for lax relief, so, also, is it true that it costs a disabled non-standard rate taxpayer more than it costs an able-bodied non-standard rate taxpayer. We should,


therefore, try to bring these two low income groups within the National Insurance provisions.
In our attitude to tax relief and National Insurance provisions we should realise that income maintenance is the basic principle at stake. What we are trying to do through tax relief—whether it be in respect of families with children, elderly people, or expectant mothers, under the National Insurance scheme, or in whatever way it may be—is to ensure that people do not find their standard of living falling because of circumstances beyond their control—because they retire, or fall out of employment, or become sick, or, as in this case, become disabled or blind.
I know that the Minister will suggest that many difficulties and problems will arise on the borderline. How do we define the borderline? It has been suggested that this matter would obsess the Minister. If the Minister is to argue on these lines, however, he must face the fact that the way in which we now decide whether people shall receive reliefs of one sort or another in respect of their incomes, or through the Ministry of Social Security, or through grants for running a car or the allocation of an invalid carriage, needs to be changed.
We should change the whole basis of assessment of eligibility. For instance, it has been shown to be wrong to base eligibility for relief in respect of a lung complaint upon X-rays. The only way in which it can be done in such a case is on the basis of clinical observation. We know of many cases where pneumoconiosis has been shown to be present at death although X-ray photographs did not show it to be present during life. If the Minister is to argue about all the problems that arise he must agree to take a wider and more clinical approach, rather than to rely on the X-ray approach, which I am sure his civil servants will suggest that he adopts.
I wholeheartedly support the Clause and those which relate only to disablement or blindness, and I hope that the Minister will accept that, eventually, we should go further—and the sooner the better.

4.30 p.m.

Mr. Raymond Gower: I suggest to the hon. Member for Cornwall,

North (Mr. Pardoe) that this matter is too urgent to await any alteration of the National Insurance arrangements or the present survey into disability. This is a grave matter for those affected. It is all very well for us, in the calm and perhaps unreal atmosphere of this Chamber, to discuss these matters objectively, but seldom, if ever, since the war have so many of the people who are living in these conditions been faced with such a savage diminution of their living standards. Therefore, the case for these Clauses is comprehensive and fair.
Nothing that we can do today will really compensate these people for their loss of faculty or blindness or other disability, but at least in the present economic difficulties—whatever the reasons: we can argue that another time —with devaluation, rises in the prices of gas, electricity and food and all the things which particularly affect the living standards of many of these people, the case for the Clauses, and particularly for the provision to bring the present amount more realistically into line with present costs, is—I agree with the hon. Member for Cornwall, North—unanswerable.
Treasury Ministers are sometimes wrongly accused of being hard-hearted. It is easy to make this claim, but if the hon. and learned Gentleman rejects the principle that the benefit should merely be altered to compensate for changes in the cost of living, and so on, he could then be legitimately accused of some hardness of heart.
As to the extension to the other categories, does he feel that the line can be held on this wholly artificial distinction between blindness and other disabilities? This probably came into being, as my hon. Friend the Member for Chelsea (Mr. Worsley) suggested, merely because blindness was easier to identify. But this should not be beyond the ingenuity of Ministers and their advisers. If the Government have the will to give some modest relief to people in these categories, they can do it. What we want to know is whether they have the will. We certainly do not want to hear what my hon. Friend the Member for Tynemouth (Dame Irene Ward) called the "old, old story" of excuses and arguments about difficulty. All we want to know is that they have the will—if so, they could find the solution.
This matter is urgent. The position of many of these people has been so prejudiced by inflation, devaluation and changes in the cost of the things they need that action should be taken now, and this is the most convenient vehicle —perhaps the only one—which we can use, certainly before the Summer Recess, and perhaps for a long time ahead. We cannot wait for surveys or National Insurance changes. The position of these people must be ameliorated now. I hope that the hon. and learned Gentleman will not refuse to accept the Clauses.

Mr. Tim Fortescue: In a brief intervention in the corresponding debate in Committee on the Finance Bill last year, which, happily, was taken on the Floor of the House, I suggested, in a debate on a new Clause providing for tax allowances for the disabled, that the Treasury would turn it down on one of three grounds.
The first was that it was the wrong moment for giving any money to anyone. I said that it was never the right moment. The second was that it was administratively impossible, on which I quoted from a speech of the present Home Secretary when in opposition on 30th May, 1962, moving almost exactly a similar Clause:
… I would make the reforms irrespective of administrative complications and tell the Inland Revenue to get on with them. I have seen this happen in the past in connection with P.A.Y.E."—[OFFICIAL REPORT, 30th May, 1962; Vol. 660, c. 1448–9.]
Since, last year, when we made this suggestion, that right hon. Gentleman was head of the Treasury team, it was difficult for the Government to make that excuse.
The third ground on which I suggested that they would turn down the Clause was that Income Tax relief in these cases was the wrong method. The Chief Secretary then chose the third of those alternatives. He did not say that it was the wrong moment—it is never the right moment—or that it was administratively impossible, which would have been difficult, in view of the quotation which I have just given from his right hon. Friend. He chose the third. He expressed sympathy and said that the blind and disabled should be helped much more, but added that this was not

the right way to do it and that it should be the responsibility of the Ministry of Social Security. He made a long and eloquent speech in that sense, and the Clause was turned down.
This year, it will be more difficult for his hon. and learned Friend. Unless he says that this is the wrong moment —it always is, so that is no excuse— this year, we have drafted the Clause differently, so that the reasons which he gave last year for this being the wrong method are no longer valid. His argument was that it would be absurd to give Income Tax relief to the disabled while doing nothing for those disabled who do not pay Income Tax, and that one could not possibly do that in ethics, morals or social rectitude, since the better-off would be helped and the worse-off would not.
Therefore, this year, we have worded it differently, and if the Minister of State accepts new Clause 36 the disabled will have the same choice as the blind now have—that is, they will be able either to have a tax allowance or to have a tax free cash benefit. So we believe, incon-trovertibly and unanswerably, that we have spiked this gun, which I suspect the hon. and learned Gentleman would have sought to shoot. Out of the three alternatives which I gave last year, there is none left, so he will have to think of something different. It will be interesting to see how he gets himself out of this dilemma, because there seems to us to be no reason for not accepting the Clause. I understand that his instructions almost certainly are not to accept it, but his logic will be carefully examined on this side and I strongly fear that it will be unacceptable.
On another point, I ask the Minister seriously to look at the present claim form for Income Tax relief, to see whether something could not be done to make that part containing the entry for the Income Tax relief for the blind more easily identifiable and simple to complete. At the moment, it is difficult to find it at all, but I imagine that there are many elderly people involved in trying to find it. Even when one finds it, it is not simple to fill it in. It could be easily simplified. Could this very minor help to the blind be considered?

Sir G. Nabarro: Mr. Deputy-Speaker, I am grateful to Mr. Speaker for stating


a few moments ago that we could have separate Divisions on new Clauses 36 and 42. I mention that at the outset so that there shall be no possible basis for future misunderstanding.
The four Motions grouped together, of which three are new Clauses and one is an Amendment, are somewhat diverse in character, though, loosely, they hang together. They all have a common objective of trying to do something for the chronically disabled. I was most impressed by what was said earlier by my hon. Friend the Member for Tynemouth (Dame Irene Ward), for her voice has been heard loud, clear and continually, over all the years I have been in the House, demanding a better deal for men and women living, sadly, on small fixed incomes, a phrase which she coined in Parliamentary parlance, and notably my hon. Friend's pleading year after year for those who are disabled.
I rise to make only two or three points briefly in support of her argument. My name is a attached to new Clause 36, directly after the name of my hon. Friend the Member for Chelsea (Mr. Worsley), who moved the new Clause so cogently and with a good deal of support from economic facts and figures.
The first point to which I address myself is a simple economic and financial fact of life, which is that inflation in our community is more rampant than it has been at any time since 1951. Sterling was devalued on 19th November, 1967. The Treasury announced, in answer to a Parliamentary Question in February, 1968, that the value of the £ had dropped to 19s. 8d. in the period of 10 weeks following devaluation. The Treasury announced in May, 1968—three months later—that the value of the £ since devaluation had dropped to 19s. 3d. It may easily be calculated that that rate of inflation equals about 10 per cent. per annum.
But the effects of devaluation have not yet worked through our economic system. In my judgment, the most virulent period is yet to come. I believe that the most virulent period will be in the second half of 1968; that will be the period when the greatest hardship is brought to bear on disabled men and women.
What should be the measure of immediate advance in their allowances for

tax purposes or cash grants or any other system decided upon is arguable and is a matter for debate. The figures mentioned in new Clause 36, I think, are approximately correct. Possibly the figure should not be exactly 30 per cent; the figure may be 25 per cent., or 35 per cent. I do not know. But these people should have a generous advance to offset the chronic influences of inflation following the devaluation of sterling last November.
4.45 p.m.
My second point concerns the proclamations which always accompany statements of economic and financial hardship when Socialist Ministers make them. The famous pronunciamento of the Prime Minister on 20th July in the year before last, the equally famous one on 16th January this year, and the others were followed by Ministerial statements saying, "We will protect the weakest members of the community from the hardships which may arise from our policies". No greater hardship can arise than the rampant inflation burning large holes in the threadbare pockets of the disabled. They suffer greater hardship than anybody else. If the Ministerial proclamations about helping the weakest members of the community mean anything at all, we should interpret them this afternoon as meaning that the disabled will have additional allowances or cash grants, whichever is the system chosen.
The third point which I make, shortly, is party political in character—and it ought to be. Four Motions are grouped together. The third is new Clause 113. I am surprised to see that is in the name of a Socialist Member—the hon. Member for Aberdeen, South (Mr. Dunbar), who had a majority of 1,799 votes on 31st March, 1966. His is a highly marginal seat. I wonder why he is not here to lend his voice in support of his Clause, selected by Mr. Speaker and being debated with two other new Clauses and one Amendment set down by Tory Members. Where is the hon. Member for Aberdeen, South? Has he been bludgeoned by the Treasury Ministers to stay away? Did I gather that the hon. Member for Woolwich, West (Mr. Hamling) said that he was under the couch?

Mr. William Hamling: He is not in the House.

Sir G. Nabarro: He is not in sight. He is not here to support his own new Clause. What a disgraceful episode! I hope that it will not go unnoticed in Aberdeen, where voters count. I see that Socialist Members are entering the Chamber fast. There may be an opportunity yet for the hon. Member to appear. Had he been here, I hoped to persuade him to join me in asking Mr. Speaker for a separate Division on his new Clause so that all my Tory right hon. and hon. Friends could go into the Lobby with his Socialist adherences—if any, for only his name appears on the Motion.
It is a muted voice. It calls for an increase in allowances for the blind. New Clause 113 asks for increased allowances only for the blind and not for other disabled men and women. But he is a generous chap is the hon. Member for Aberdeen, South. He wants an allowance of £50 more for every blind person —an increase from £100 a year to £150 a year, a very generous sentiment indeed. He put that on the Notice Paper of the House, but he has not come here to speak for his own Motion. I castigate him accordingly.
With those few words, I support new Clause 36 and I support new Clause 42. Were there a separate Division, I should support the hon. Member for Aberdeen, South, Socialist though he is, for his sentiments are noble. I hope that the Treasury Ministers will give us a crumb of comfort in their replies, in the form of advanced allowances for all disabled men and women, or, as an alternative, cash grants in the form recommended by my hon. Friend.

Lord Balniel: The purpose of this group of Clauses is to help the disabled. They have been moved powerfully and persuasively by my hon. Friend the Member for Chelsea (Mr. Worsley) and supported by the absolutely conclusive arguments of all my hon. Friends and even by the representative of the Liberal Party.
The purpose of the Clauses falls into two parts. On the one hand, there is the intention to restore the value of the allowances available to the blind to the original level at which they were fixed in 1962. There is the other and wider purpose to extend the narrow category of disability from blindness alone so as to

cover all forms of disability which are deserving not only of our compassion, but also of our help.
It is right that we should remember that it was in 1962, as the result of a long and arduous campaign waged by my hon. Friend the Member for Plymouth, Devonport (Dame Joan Vickers), that for the first time an allowance for the blind was included in a Finance Bill. We have though this time to consider the Clauses in the context of a Budget which will harm the standard of life of the community as a whole. In such a context we must go out of our way particularly to help those sections of the community who are not able to help themselves. We must implement the undertaking which was so freely given by the Prime Minister to protect the most vulnerable sections of the community from the full impact of devaluation and the rising cost of living.
We are asking in one Clause that the allowance for the blind should be restored to the purchasing power at which it was originally fixed and which, since then, has been eroded by about 25 per cent. The debate is taking place in the context of an absolute deluge of price increases. As my hon. Friends the Member for Harwich (Mr. Ridsdale) and the Member for Tynemouth (Dame Irene Ward) said, the deluge of price increases has as its central core the disturbing fact that the emphasis of the increases is on those prices which cause the greatest hardship to the housebound and the disabled. Gas, electricity and other fuel prices: these are the prices which have a greater impact on the disabled and the elderly than on any other section of the community.
I should have thought that the argument simply to restore the allowances to a value which they held in 1962 was so absolutely conclusive that I cannot see what kind of argument the Minister will advance against it. I can only assume that he will be prepared to meet our request when he rises to address the House.
There is the wider aspect on some of the Clauses, and it is on this that I wish to develop the argument in slightly greater detail. The Clause, as in former years, is designed to extend the category of disability so as to cover all forms of disability. I intend to argue the case on


its merits rather than to refer to the speeches and the promises which were made by the Ministers when they were in Opposition. In a purely political context, I do not deny that it is tempting and totally relevant that I should refer to the promises which were made by hon. Gentlemen opposite when they were in opposition, but this is a sterile form of debate, and not in the best interests of the handicapped and the disabled. The arguments of merit are the arguments which matter.
When a somewhat similar Clause was debated during the passage of the last Finance Bill, the Government spokesmen primarily devoted their arguments to problems of definition and problems of administration. I intend to refer to these, since so far the Government have not made their case that the problems are insuperable. Before I do so though, I intend to echo the words of my hon. Friend the Member for Chelsea, that we feel that there is a better way of helping the disabled.
The Clause is drafted as it is because it is the only way which is open to us within the existing machinery to bring help to the disabled, and help must be brought urgently and now. Because of rising prices, there is an urgent need to bring help, even although the help which we suggest in the Clause is not the absolute ideal which we would like to achieve.
I have for a long time been interested in the problems of the disabled as have those of my hon. Friends who have spoken in the debate. It is in the experience of all of us as Members of Parliament that, at the heart of many of the problems of daily life for the disabled, lies the question of income deficiency. The disabled have a dual problem to face over and above their physical or mental disability.
On one side, it is difficult for them to find employment and, even having found employment, they find it difficult to earn the wages and salaries which persons in good health are able to obtain. Their problems in finding employment have been accentuated and increased by the introduction of the Selective Employment Tax, and they will be redoubled when the Selective Employment Tax is increased.

The Minister of State, Treasury (Mr. Dick Taverne): To avoid dealing with this point specifically, may I interrupt the hon. Gentleman to say that he is no doubt aware of the special exemption which is made for the disabled, exempting them from the Selective Employment Tax increase.

Lord Balniel: If the Minister will look at the Selective Employment Payments Act, 1966, Section 6(2), he will find that it is a very limited class who are exempted. The general impression gained by hon. Members in their constituencies is that the problems of the disabled have been made greater by the impact of the Selective Employment Tax. So on the one side, their problems of earning are greater, and, on the other, their expenditure is greater. Their expenditure on clothing is greater. Many of them have artificial limbs; many can only move with the support of crutches, and it is common knowledge that because of this the clothing expenditure of the disabled is greater than (hat of persons in good health.
The same applies to expenditure on transport. They cannot use the Underground or the buses, and very often they cannot use the railway service. They have to use taxis or other more expensive forms of transport. They have to undertake the adaptation of their houses to meet their special needs and this also involves them in considerable expenditure. They are unable to decorate their houses themselves as would be done by persons in good health. They must employ decorators to do it for them. They have to ask friends to undertake their shopping for them, and are not able to shop around for the best bargains.
5.0 p.m.
As Chairman of the National Association for Mental Health, I am interested in the problems of the mentally handicapped, be it through mental illness or subnormality. Yesterday, I was addressing the International Conference on the Rehabilitation of the Disabled. In a few days' time I shall be speaking at the big rally in London of the Disablement Income Group. All of us who have this background knowledge and who are interested in the problems of the disabled are aware of the anomalies which exist. Some disabilities, because they are


caused by industrial injury or accident, receive benefit, but long-term incapacity caused, for instance, by multiple sclerosis, poliomyelitis, muscular dystrophy, or deafness receive no benefit.
Our aim as a country must be to see that we accept the principle that all forms of disability should be treated alike, whether the cause is an industrial injury or accident or whether it is some other cause such as disease. There is much strength in the argument that we should move towards the payment of a cash allowance, which is the point made by my hon. Friends the Members for Liverpool, Garston (Mr. Fortescue) and Barry (Mr. Gower). In this way one could bring help to the disabled housewife as readily as it is provided for the person suffering from an industrial injury. The wording of the new Clause is a step in that direction, because it is designed to treat all disability the same, whatever its cause.
However, no cash allowance exists at the moment, and my hon. Friend the Member for Chelsea has drafted the Clause so as to use the existing machinery of the tax system, which is the only means available to us under the Finance Bill. The Government argue that it is difficult to define "disability" and that the Clause is difficult to administer. The definition that we have used is, however, that used in the industrial injuries scheme.
If the Government cannot go the whole way, surely they can make some move in this direction. Certain diseases are prescribed under the industrial injuries scheme, and I cannot see why it is not possible to attempt to prescribe other diseases for the purposes of the Clause. Why, for example, cannot the Minister prescribe multiple sclerosis, poliomyelitis, deafness, of muscular dystrophy? I cannot see why he should not attempt to move in this direction.
The Clause also highlights the lack of statistical information about the extent of chronic disability. We all know the number of persons who are disabled and in receipt of war disablement pensions, the number in receipt of industrial injury pensions, the number in receipt of sickness benefits for over six months, and the number in receipt of supplementary benefits because of disablement. We do not, however, have statistical information

about the number of chronically disabled people who are not in employment, and we do not know the number of disabled housewives.
If the Government accept the Clause, the Minister will be forced to draw up a complete disablement register. It has been expected for a long time. Because of the delays which have occurred in the past, we believe that the time has come when we should force the Government to draw up such a disablement register so that at least we know the extent and degree of disability in the country.
The review of social security has proceeded for so long that the Government must now be in a position to announce whether it is their intention to introduce an allowance for the disabled. I hope that the Minister of State will announce that that is his intention. Every day which passes, price increases grow greater and the hardship for the disabled grows greater. The disillusion is the greater because the Government promised so much when they were in opposition, and they have fulfilled so little in practice.
In default of an announcement today of the Government's intention to introduce some form of disability allowance, I believe that we are right to press for the inclusion of this Clause in the Finance Bill, accepting that it is not completely ideal. It will not bring help to all the disabled, but it will bring substantial help to many who are suffering great hardship at present.

Mr. Taverne: Perhaps I might deal, first, with the wider question which has been discussed in this debate, which is that of the disabled in general and not just that of the blind.
The arguments which have been put forward very forcefully and in many cases very eloquently are not dissimilar to those advanced last year and in something like 10 out of the last 14 Finance Bills. The House is aware of this, and if the hon. Member for Hertford (Lord Balniel) taunts the former Opposition with what they said in those debates, I hope that some restraint will be exercised, because it is also true that the majority of his colleagues, with the exception of the hon. Member for Tynemouth (Dame Irene Ward), were sufficiently persuaded by the arguments advanced from the Treasury


Bench against a similar type of proposal in 1962 that they voted against the introduction of a special disablement allowance. We must see the position against the background of previous debates.
We had much the same debate last year, when a similar new Clause was before the House. As far as I can see, the only difference between the wording of the present Clause and the one last year is that on this occasion the words
which is substantial and likely to be permanent
are used instead of
which is likely to be permanent.
We are concerned with very much the same issue.
In the past, when these issues have been before the House, Treasury Ministers have expressed sympathy, but, except for one occasion in one direction, they have not found it possible to agree to the proposals. That one occasion was in 1962, when the special allowance for the blind was introduced. I must make it quite clear that, when it was introduced, it was not intended as a first step, as a number of hon. Gentlemen have suggested today. The Chief Secretary at that time explained that it was felt by the Government that, with the blind being an easily identifiable group because they could be identified through being on local authority registers, it was possible to treat them exceptionally, but quite impossible to extend the benefit wider or implement the recommendations of the Royal Commission.
This is not because there is some kind of callousness which enters into the souls of those who become Treasury Ministers. In all these debates, they face the dilemma that, if they show an understanding of the problems involved, they are called hypocritical, and if they say that the real difficulties must be looked at, they are described as callous. But that it is not callousness was shown last year when my hon. Friend the Member for Plymouth, Sutton (Dr. David Owen), speaking not as a Treasury Minister and not on behalf of the Disablement Income Group, but certainly as a Vice-Chairman of that Group, reluctantly had to come to the conclusion that this was not the way in which relief should be given.
I know that this will not make what I have to say more palatable to hon.

Members opposite, but I, too, have been in correspondence with the Disablement Income Group and I know the problems. I hope that we can approach the question on merit, as the hon. Member for Hertford said, and will not argue that one side has a monopoly of compassion and that callousness on the part of the Treasury makes it indifferent to the sufferings of the disabled.
The main argument last year, as it is now, was that of fairness. The hon. Member for Liverpool, Garston (Mr. Fortescue) said that he would anticipate the arguments advanced, and hoped that they would not be the same as those used on a previous occasion. It is very easy to say that one may answer the arguments now put forward, but may not use the main argument on which it has been necessary to rely on the 10 occasions when the question has been raised in the past 14 years.
The main objection to the relief embodied in the Clause is based on fairness and the difficulties of avoiding unfairness. A Government must be concerned with social policy as a whole, and consider it both from the point of view of social welfare and taxation policy. They must weigh up the needs to raise revenue and the way in which relief can fairly and best be given through allowances, and the way in which other means, such as cash payments, can be used to deal with particular problems. They must use for the maximum benefit whatever funds they have or raise.
The means of granting relief provided for in the Clause is the least effective for those in the greatest need and suffering the greatest hardship, such as those to whom the noble Lord referred, who find it impossible through their disability to obtain employment. It will help those who are in comparatively less need. It will help those who are better off more, and do nothing to help those for whom the hardship is greatest. This cannot be denied. The only real solution must lie in the direction which the hon. Member for Cornwall, North (Mr. Pardoe) mentioned, and to which a number of other hon. Members referred, through long-term disability payments.

Mr. Fortescue: I said that under our new Clause this year it was not true that


the better off would be helped more, because the blind person's allowance can also be taken in the form of tax-free cash benefit, and that we propose that that choice should be extended to the permanently and substantially disabled. Last year's argument was valid then, but it is no longer valid.

Mr. Taverne: Exactly the same question applies as before. Under the Clause, a benefit will go to those who pay tax. None will go to those who do not pay tax. Those who do not come within the taxable range get no benefit from the relief, and they are those who suffer the greatest hardship and face the greatest difficulties.
A further aspect of the fairness or unfairness in the Clause arises from the administrative complications. If the relief is given as the Clause suggests there will be cases where the sense of unfairness will be increased. I am aware that the Royal Commission on the Taxation of Profits and Income suggested that this allowance should be given, but all Governments who have examined it and tried to implement the recommendation have encountered insuperable administrative difficulties, or at any rate difficulties of a kind which would increase the sense of unfairness in particular cases. The found it impossible to take into account all the varieties of personal circumstances in granting tax relief.
If the Clause were adopted there would be endless argument about what is a substantial loss of physical or mental faculty, and in numerous cases where the argument was lost compared with others where it succeeded there would be an increased sense of unfairness. I think that it was the hon. Member for Chelsea who said that we should not worry about the resentment caused in borderline cases. That is not the argument that we are used to meeting when we are debating the Selective Employment Tax, when, time after time, hon. Members opposite say that what is inherently objectionable about it is that it leads to borderline disputes which create such a sense af unfairness that the tax as a whole becomes monstrous and unjust. When we come to questions like the concessions to hotels in rural areas the point is often made that it would be

better not to give the concession because of the unfairness as between those who get it and those who do not.

5.15 p.m.

Sir G. Nabarro: Does not the Minister agree that the disabled are easily identifiable? There is no administrative problem with disabled men and women because if they are registered disabled they carry cards.

Mr. Taverne: But the Clause does not suggest that only registered disabled should receive that benefit. If the Clause were adopted it would be necessary to decide whether particular individuals had suffered a substantial loss of physical or mental faculty, whether they were deaf, dumb or otherwise handicapped by loss of physical or mental faculties. We should have to deal with cases of the chronic sick and people who became handicapped through increasing age. We should deal with a number of cases where it is very difficult to decide who comes within the description and who does not. There is no existing system of medical assessment except in the cases of war disablement and industrial injuries. In these cases, the taxpayers involved would in any event be in receipt of tax-free disability payments and, therefore, under the Royal Commission recommendation, they would probably not get the benefit from the tax concessions.
The degree of disability resulting from injury can largely be determined by a set of rules, but when one comes to chronic illnesses or some of the other disabilities, the assessment is bound to be much more subjective, and it is bound to be much more difficult to be consistent. In such cases, the great sense of resentment between those who came on one side of the line and those who came on the other would be enormous, quite apart from the large number of appeals, objections and applications which would be involved.
The Royal Commission said that one should start cautiously, but it did not suggest that one should start with anything less than 100 per cent. disability. Even if one took the "substantial" rule under the 1946 Act, which meant 20 per cent., it would be very difficult to determine what is a 20 per cent. disability. Therefore, there would undoubtedly be an increased sense of unfairness under


the Clause over the way in which some would get the allowance and some would not. It would be most difficult to administer, and it would not deal with those cases where the hardship was greatest.

Mr. Gower: The Minister says that it would not deal with those cases where the need was greatest. I see his point. But he deems that a fatal objection to the Clause. Surely it would be an equally fatal objection to the similar concession already made to the blind?

Mr. Taverne: That is true to some extent, but there are more blind people receiving outside payments than, for example, the chronic sick, the deaf, or many of the other categories which would be involved. To some extent I take the hon. Gentleman's point. Indeed, it is one which can be made against the increase in the allowance to the blind which is being sought. In any event, he is right in this respect, that it has always been a very small percentage of the total in receipt of the allowance. Less than one person in four is in a position to claim the allowance in any event.
The hon. Member for Harwich (Mr. Ridsdale) said that one can make one concession to the blind and say that their allowance should be additional to the old-age allowance which exists. But there is a snag. The blind allowance is an additional allowance to the other allowances which exist and one cannot regard the blind allowance in that sense separately from other personal allowances. If there were special additions to the ordinary age exemption limits for blind people there would be no answer to a claim that there should be special additions in all other cases where the elderly person was entitled to some tax allowance over and above the basic single or married person's allowance— for example, the dependent relative allowance.
One cannot treat the different allowances separately. While one can recognise the case in equity for doing so, it has never been the case that the personal allowances in various Finance Bills have been raised in accordance with the rise in the cost of living.

Dame Irene Ward: There is no reason why we should not start.

Mr. Taverne: The hon. Lady, on the ground that she voted against her party, is entitled to make that objection, but the fact remains that that kind of remark is always made by a party in opposition, and this was not done when the Conservative Party was in power. Certainly, the hon. Member for Worcestershire, South (Sir G. Nabarro), in 1962, recorded his vote against a very similar clause.

Sir G. Nabarro: I do not want to get myself out of order by answering the hon. and learned Gentleman, who was not in the House in 1962 anyway and does not remember the circumstances and the continuous increase in Income Tax allowances granted by the Tory Party. But I want to follow up the interjection by my hon. Friend the Member for Tyne-mouth. "There is no reason why we should not start now", she said with characteristic candour and bluntness. I would add that there is a perfect analogy from the chapter of administration by the Labour Government, who brought in the wage-related benefits. A wage-related benefit is precisely the same as what we are pleading for in principle.

Mr. Taverne: The hon. Member has a point in saying that the kind of problem with which we are concerned here is not dissimilar from other forms of social benefits, like a wage-related unemployment benefit, which was introduced by the Labour Government. The way that I should like to see this difficulty solved —I think that it is the right way in which the problem should be approached— would be through a social service benefit, which could be dealt with possibly—this is a matter which is being considered— by some wage-related contributions. So the hon. Member for Worcestershire, South, in his interruption, has very much reinforced the argument I was making at the beginning.
I was saying that one cannot treat this allowance as separate. After all, the cost of living increase affects all forms of allowances. These are problems which one should consider together. On this problem, as the hon. Member for Garston will no doubt note, one must have regard to the overall economic circumstances of the time.
For these reasons, with the greatest regret—I know that hon. Members will not readily accept this, but I think it is something which anyone who deals with


the problem must feel—I cannot ask the House to accept the Clause.

Lord Balniel: The hon. and learned Gentleman has concentrated his argument overwhelmingly on the proposal to extend the categories so as to cover all the disabled. We are in that respect disappointed with the argument which he has developed against the Clause. What he has not done is to explain to the House why he is not prepared to accept the specific proposal to restore the value of the allowance to the blind, which has been eroded now by 25 per cent.

Mr. Taverne: I have done so. There are two answers. The first is the general answer, which, admittedly, I introduced by way of reply to an interjection from the hon. Member for Barry (Mr. Gower). That is that in this case a factor which one has to consider is whether one should use the money available in the best possible way by increasing tax allowances or whether one should seek to meet the problem by a general approach of social security. In the case of the increased tax allowance to the blind, once again the benefit of the concession would go not to those who are worse off, but to those who are comparatively better off.

As to the second answer to the problem, I explained that the blind allowance was an additional allowance to other personal allowances, and that the kind of considerations about increases in the cost of living which apply to the blind allowance apply equally to other personal allowances. It is impossible to say that in the case of one particular allowance the cost-of-living index should operate and that in the case of other allowances it should not.

Mr. Ridsdale: I have listened to what the Minister has had to say, and I think that he has been most callous towards a very needy section of the community. He has made promises about social service relief. I remind him that sympathy without relief is like mustard without beef.
My hon. Friend the Member for Tyne-mouth (Dame Irene Ward) is right when she asks why we should not start helping people now. For this reason, I ask my hon. Friends to support me in the Division Lobby.

Question put, That the Clause be read a Second time: —

The House divided: Ayes 167, Noes 204.

Division No. 262.]
AYES
[5.27 p.m.


Alison, Michael (Barkston Ash)
d'Avigdor-Goldsmid, Sir Henry
Hordern, Peter


Allason James (Hemel Hempstead)
Dean, Paul (Somerset, N.)
Hunt, John


Astor, John
Dodds-Parker, Douglas
Iremonger, T. L.


Awdry, Daniel
Eden, Sir John
Jenkin, Patrick (Woodford)


Baker, Kenneth (Acton)
Elliot, Capt. Walter (Carshalton)
Johnson Smith, G. (E. Grinstead)


Baker, W. H. K. (Banff)
Emery, Peter
Jopling, Michael


Balniel, Lord
Errington, Sir Eric
Kirk, Peter


Beamish, Col Sir Tufton
Eyre, Reginald
Knight, Mrs. Jill


Bennett, Sir Frederic (Torquay)
Farr, John
Lane, David


Bennett, Dr. Reginald (Gos. &amp; Fhm)
Fisher, Nigel
Langford-Holt, Sir John


Biggs-Davison, John
Fletcher-Cooke, Charles
Legge-Bourke, Sir Harry


Birch, Rt. Hn. Nigel
Fortescue, Tim
Lewis, Kenneth (Rutland)


Black, Sir Cyril
Galbraith, Hn. T. G.
Lloyd,Rt.Hn.Geoffrey(Sut'nC'dtfield)


Blaker, Peter
Gibson-Watt, David
Loveys, w. H.


Boardman, Tom (Leicester, S.W.)
Glover, Sir Douglas
Lubbock, Eric


Boyle, Rt. Hn. Sir Edward
Glyn, Sir Richard
McAdden, Sir Stephen


Braine, Bernard
Godber, Rt. Hn. J. B.
MacArthur, Ian


Brewis, John
Gower, Raymond
Mackenzie,Alasdair(Ross&amp;Crom'ty)


Bromley-Davenport,Lt.-Col.SirWalter
Grant, Anthony
Maclean, Sir Fitzroy


Brown, Sir Edward (Bath)
Griffiths, Eldon (Bury St. Edmunds)
Macleod, Rt. Hn. Iain


Bruce-Gardyne, J.
Grimond, Rt. Hn. J.
McMaster, Stanley


Buchanan-Smith Alick,(Angus,N&amp;M)
Gurden, Harold
Maddan, Martin


Buck, Anthony (Colchester)
Hall, John (Wycombe)
Maginnis, John E.


Campbell, B. (Oldham, West)
Harris, Frederic (Croydon, N.W.)
Marten, Neil


Campbell, Gordon (Moray &amp; Nairn)
Harrison, Brian (Maldon)
Maude, Angus


Carr, Rt. Hn, Robert
Harvey, Sir Arthur Vere
Mawby, Ray


Channon, H. P. G.
Harvie Anderson, Miss
Maxwell-Hyslop, R. J.


Chichester-Clark, R.
Hawkins, Paul
Mills, Peter (Torrington)


Clegg, Walter
Heald, Rt. Hn. Sir Lionel
Miscampbell, Norman


Cooke, Robert
Heath, Rt. Hn. Edward
Monro, Hector


Corfield, F. V.
Higgins, Terence L.
Montgomery, Fergus


Costain, A. P.
Hill, J. E. B.
More, Jasper


Craddock, Sir Beresford (Spelthorne)
Hirst, Geoffrey
Morgan, Geraint (Denbigh)


Cunningham, Sir Knox
Hogg, Rt. Hn. Quintin
Munro-Lucas-Tooth, Sir Hugh


Dance, James
Holland, Philip
Murton, Oscar


Davidson, James (Aberd'nshire, W.)
Hooson, Emlyn
Nabarro, Sir Gerald




Nicholls, Sir Harmar
Royle, Anthony
Waddington, D.


Noble, Rt. Hn. Michael
Russell, Sir Ronald
Wainwright, Richard (Colne Valley)


Nott, John
Scott, Nicholas
Walker, Peter (Worcester)


Onslow, Cranley
Scott-Hopkins, James
Walker-Smith, Rt. Hn. Sir Derek


Orr-Ewing, Sir Ian
Sharples, Richard
Walters, Dennis


Osborn, John (Hallam)
Shaw, Michael (Sc'b'gh &amp; Whitby)
Ward, Dame Irene


Osborne, Sir Cyril (Louth)
Sinclair, Sir George
Weatherill, Bernard


Page, Graham (Crosby)
Smith, John (London &amp; W'minster)
Wells, John (Maidstone)


Page, John (Harrow, W.)
Speed, Keith
Whitelaw, Rt. Hn. William


Pardoe, John
Stainton, Keith
Williams, Donald (Dudley)


Pearson, Sir Frank (Clitheroe)
Summers, Sir Spencer
Wills, Sir Gerald (Bridgwater)


Peel, John
Tapsell, Peter
Wilson, Geoffrey (Truro)


Percival, Ian
Taylor, Sir Charles (Eastbourne)
Winstanley, Dr. M. P.


Pike, Miss Mervyn
Taylor,Edward M.(G'gow.Cathcart)
Wolrige-Gordon, Patrick


Powell, Rt. Hn. J. Enoch
Taylor, Frank (Moss Side)
Worsley, Marcus


Prior, J. M. L.
Temple, John M.
Wylie, N. R.


Pym, Francis
Thatcher, Mrs. Margaret
Younger, Hn. George


Ramsden, Rt. Hn. James
Turton, Rt. Hn. R. H.



Rhys Williams, Sir Brandon
van Straubenzee, W. R.
TELLERS FOR THE AYES:


Ridsdale, Julian
Vaughan-Morgan, Rt. Hn. Sir John
Mr. R. W. Elliott and


Rossi, Hugh (Hornsey)
Vickers, Dame Joan
Mr. Timothy Kitson.




NOES


Albu, Austen
Fletcher, Ted (Darlington)
Mahon, Simon (Bootle)


Allaun, Frank (Salford, E.)
Foot, Michael (Ebbw Vale)
Mallalieu, E. L. (Brigg)


Allen, Scholefield
Forrester, John
Manuel, Archie


Anderson, Donald
Fraser, John (Norwood)
Marquand, David


Archer, Peter
Freeson, Reginald
Mason, Rt. Hn. Roy


Armstrong, Ernest
Galpern, Sir Myer
Mayhew, Christopher


Atkins, Ronald (Preston, N.)
Garrett, W. E.
Mendelson, J. J.


Atkinson, Norman (Tottenham)
Gourlay, Harry
Millan, Bruce


Barnes, Michael
Gray, Dr. Hugh (Yarmouth)
Miller, Dr. M. S.


Barnett, Joel
Greenwood, Rt. Hn. Anthony
Milne, Edward (Blyth)


Baxter, William
Griffiths, Eddie (Brightside)
Molloy, William


Beaney, Alan
Griffiths, Rt. Hn. James (Llanelly)
Moonman, Eric


Bence, Cyril
Griffiths, Will (Exchange)
Morgan, Elystan (Cardiganshire)


Bennett, James (G'gow, Bridgeton)
Hamilton, James (Bothwell)
Morris, Charles R. (Openshaw)


Bishop, E. S.
Hamilton, William (Fife, W.)
Moyle, Roland


Blenkinsop, Arthur
Hamling, William
Neal, Harold


Boston, Terence
Hannan, William
Newens, Stan


Bottomley, Rt. Hn. Arthur
Harper, Joseph
Norwood, Christopher


Braddock, Mrs. E. M.
Harrison, Walter (Wakefield)
Oakes, Gordon


Bradley, Tom
Heffer, Eric S.
Ogden, Eric


Bray, Dr. Jeremy
Henig, Stanley
O'Malley, Brian


Brooks, Edwin
Herbison, Rt. Hn. Margaret
Oram, Albert E.


Brown, Rt. Hn. George (Belper)
Hooley, Frank
Orme, Stanley


Brown, Hugh D. (G'gow, Provan)
Homer, John
Oswald, Thomas


Brown, R. W. (Shoreditch A F'bury)
Houghton, Rt. Hn. Douglas
Owen, Will (Morpett)


Buchan, Norman
Howarth, Harry (Wellingborough)
Page, Derek (King's Lynn)


Buchanan, Richard (G'gow, Sp'burn)
Hoy, James
Palmer, Arthur


Cant, R. B.
Huckfield, Leslie
Pannell, Rt. Hn. Charles


Carmichael, Neil
Hughes, Emrys (Ayrshire, S.)
Parkyn, Brian (Bedford)


Carter-Jones, Lewis
Hughes, Hector (Aberdeen, N.)
Pavitt, Laurence


Chapman, Donald
Hughes, Roy (Newport)
Pearson, Arthur (Pontypridd)


coe, Denis
Hunter, Adam
Peart, Rt. Hn. Fred


Coleman, Donald
Irvine, Sir Arthur (Edge Hill)
Pentland, Norman


Conlan, Bernard
Jackson, Colin (B'h'se &amp; Spenb'gh)
Perry, Ernest G. (Battersea, S.)


Cronin, John
Jenkins, Hugh (Putney)
Perry, Ceorge H. (Nottingham, S.)


Cullen, Mrs. Alice
Jenkins, Rt. Hn. Roy (Stechford)
Prentice, Rt. Hn. R. E.


Dalyell, Tam
Johnson, Carol (Lewisham, S.)
Price, Thomas (Westhoughton)


Darling, Rt. Hn. George
Johnson, James (K'ston-on-Hull,W.)
Probert, Arthur


Davidson, Arthur (Accrington)
Jones,Rt.Hn.SirElwyn(W.Ham,S.)
Rankin, John


Davies, Ednyfed Hudson (Conway)
Jones, J. Idwal (Wrexham)
Rees, Merlyn


Davies, Harold (Leek)
Judd, Frank
Richard, Ivor


Davies, Ifor (Gower)
Kelley, Richard
Robertson, John (Paisley)


Dell, Edmund
Kerr, Mrs. Anne (R'ter &amp; Chatham)
Rodgers, William (Stockton)


Dempsey, James
Kerr, Russell (Feltham)
Rogers, George (Kensington, N.)


Dewar, Donald
Lawson, George
Rose, Paul


Diamond, Rt. Hn. John
Ledger, Ron
Rowlands, E. (Cardiff, N.)


Dickens, James
Lever, Harold (Cheetham)
Sheldon, Robert


Doig, Peter
Lewis, Arthur (W. Ham, N.)
Shore, Rt. Hn. Peter (Stepney)


Dunnett, Jack
Lomas, Kenneth
Short, Mrs. Renée (W'hampton.N.E.)


Dunwoody, Mrs. Gwyneth (Exeter) 
Loughlin, Charles
Silkin, Rt. Hn. John (Deptford)


Dunwoody, Dr. John (F'th &amp; C'b'e)
Mabon, Dr. J. Dickson
Silkin, Hn. S. C. (Dulwich)


Edwards, Robert (Bilston)
McBride, Neil
Silverman, Julius


Edwards, William (Merioneth)
MacColl, James
Slater, Joseph


Ellis, John
Macdonald, A. H.
Small, William


English, Michael
McGuire, Michael
Snow, Julian


Ensor, David
Mackenzie, Cregor (Rutherglen)
Spriggs, Leslie


Evans, loan L. (Birm'h'm, Yardley)
Mackintosh, John P.
Steele, Thomas (Dunbartonshire, W.)


Faulds, Andrew
Maclennan, Robert
Stewart, Rt. Hn. Michael


Fernyhough, E.
McNamara, J. Kevin
Strauss, Rt. Hn. G. R.


Fletcher, Raymond (Ilkeslon)
Mahon, Peter (Preston, S.)
Swingler, Stephen







Taverne, Dick
Watkins, Tudor (Brecon &amp; Radnor)
Williams, W. T. (Warrington)


Thornton, Ernest
Wellbeloved, James
Willis, Rt. Hn. George


Tinn, James
Whitaker, Ben
Wilson, Rt. Hn. Harold (Huyton)


Tuck, Raphael
White, Mrs. Eirene
Winnick, David


Urwin, T. W.
Whitlock, William
Woof, Robert


Varley, Eric G.
Wilkins, W. A.
Yates, Victor


Walker, Harold (Doncaster)
Williams, Alan (Swansea, W.)



Wallace, George
Williams, Alan Lee (Hornchurch)
TELLERS FOR THE NOES:


Watkins, David (Consett)
Williams, Mrs. Shirley (Hitchin)
Mr. Alan Fitch and




Mr. John McCann.

New Clause 42

OLD AGE RELIEF AND RELIEF FOR BLIND PERSONS

Notwithstanding anything in the Income Tax Acts to the contrary, the rule that old age relief shall be in substitution for and not in addition to relief for blind persons shall cease to have effect.—[Mr. Ridsdale.]

Brought up, and read the First time.

Motion made, and Question put, That the Clause be read a Second time.

The House divided: Ayes 167, Noes 215.

Division No. 263.]
AYES
5.37 P. M.


Alison, Micheal (Barkston Ash)
Griffths, Eldon (Bury St. Edmunds)
Page, Graham (Crosby)


Allson,James (Hemel Hemphstead)
Grimond, Rt. Hn. J.
Page, John (Harrow, W.)


Astor, John
Gurden, Harold
Pardoe, John



Hall, John (Wycombe)
Pearson, Arthur (Clitheroe)


Awdry, Daniel
Harris, Frederic (Croydon, N.W.)
Peel, John


Baker, Kenneth (Acton)
Harrison, Brian (Maldon)
Percival, Ian


Baker, W. H. K. (Banff)
Harvey, Sir Arthur Vere
Pike, Miss Mervyn


Balniel, Lord
Harvie Anderson, Miss
Pounder, Rafton


Beamish, Col. Sir Tufton
Hawkins, Paul
Powell, Rt, Hn. J. Enoch


Bennett, Dr. Reginald (Gos. &amp; Fhm)
Heald, Rt. Hn. Sir Lionel
Prior, J. M. L.


Biggs-Davison, John
Heath, Rt. Hn. Edward
Pym, Francis


Birch, Rt. Hn. Nigel
Higgins, Terence L.
Ramsden Rt. Hn James


Black, Sir Cyril
Hill, J. E. B.
Rhys Williams, Sir Brandon


Blaker, Peter
Hirst, Geoffrey
Ridsdale, Julian


Boardman, Tom (Leicester, S.W.)
Holland, Philip
Rossi, Hugh (Hornsey)


Bossom, Sir Clive
Hooson, Emlyn
Royle, Anthony


Boyle, Rt. Hn. Sir Edward
Hordern, Peter
Russell, Sir Ronald


Braine, Bernard
Hunt, John
Scott, Nicholas


Brewis, John
Iremonger, T. L.
Scott-Hopkins, James


Bromley-Davenport, Lt,-Col. Sir Walter
Jenkin, Patrick (Woodford)
Sharples, Richard


Brown, Sir Edward (Bath)
Johnson Smith, G. (E. Grinstead)
Shaw, Michael (Sc'b'gh &amp; Whitby)


Bruce-Gardyne, J.
Jopling, Micheal
Sinclair, Sir George


Buchnan-Smith, Alick (Angus, N&amp;M)
Kirk, Peter
Smith, Dudley (W' wick &amp; L'mington)


Buck, Anthony (Colchester)
Knight, Mrs. Jill
Smith, John (Londen &amp; W'minster)


Camphell, B. (Oldham, West)




Campbell, Gordon (Moray &amp; Nairn)
Lane, David
Speed, Keith


Carr, Rt. Hn. Robert
Langford-Holt, Sir John
Stainton, Keith


Channon, H. P. G.
Legge-Bourke, Sir Harry
Summers, Sir Spencer


Chisester-Clark, R.
Lewis, Kenneth (Ruthland)
Tapsell, Peter


Clegg, Walter
Lloyd, Rt. Hn. Geofferoy n(Sut'nC'dfield)
Taylor, Sir Charles (Eastbourne)


Cooke, Robert
Loveys, W. H.
Taylor, Edward M. (G'grow, Cathcart)


Corfield, F. V.
Lubbock, Eric
Taylor, Frank (Moss Side)


Costain, A. P
McAdden, Sir Stephen
Temple, John M.


Craddock, Sir Beresford (Spelthrone)
MacArthur, lan
Thatcher, Mrs. Margarett


Cunningham, Sir Knox
Mackenzie, Alasdair (Ross&amp;Crom'ty)
Turton, Rt. Hn. R. H.


Dance, James
Maclean, Sir Fitzroy
Van Straubenzee, W. R.


Davidson, James (Aberdeenshire W.)
Macleod, Rt. Hn. lain
Vaughan-Morgon, Rt. Hn. Sir John


d'Avigdor-Goldsmid, Sir Hendry
McMaster, Stanley
Vickers, Dame Joan


Dean, Paul (Somerset, N.)
Madden, Martin
Waddington, D.


Dodds-Parker, Douglas
Marten, Neil
Wainwright, Richard (Colne Valley)


Eden, Sir John
Maude, Argus
Walker-Smith, Rt. Hn. Sir Derek


Elliot, Capt. Walter (Carshalton)
Mawby, Ray
Walters, Dennis


Emry, Peter
Maxwell-Hyslop, R. J.
Ward, Dame Irene


Errington, Sir Eric
Mills, Peter (Torrington)
Weatherill, Bernard


Eyre, Reginald
Mischamphell, Norman
Wells, John (Maidstone)


Farr, John
Monro, Hector
Whitelaw, Rt. Hn. William


Fisher, Nigel
Montegomery, Fernus
Williams, Donald (Dudley)


Fletcher-Cooke, Charles
More Jasper
Wills, Sir Gerald (Bridgewater)


Fortescue, Tim
Morgan, Geraint (Denbigh)
Wilson, Geoffery (Truro)


Galbraith, Hn. T. G.
Munro-Lucas-Tooth, Sir Hugh
Winstanley, Dr. M. P.


Gibson-Watt, David
Murton, Oscar
Wolridge-Gorden, Patrick


Glover, Sir Douglas
Nabarro, Sir Gerald
Worsley, Marcus


Glyn, Sir Richard
Nicholls, Sir Harmer
Wylie, N. R.


Godber, Rt. Hn. J. B.
Nott, John
Younger, Hn. George


Goodhart, Philip
Onslow, Cranley



Goodhew, Victor
Orr-Ewing, Sir Ian
TELLERS FOR THE AYES:


Gower, Raymond
Osborn, John (Hallam)
Mr. R. W. Elliott and


Grant, Anthony
Osborne, Sir Cyrill (Louth)
Mr. Timothy Kitson




NOES


Albu, Austen
Greenwood, Rt. Hn. Anthony
Oakes, Gordon


Allaun, Frank (Salford, E.)
Gregory, Arnold
Ogden, Eric


Alldritt, Walter
Griffiths, Eddie (Brigntside)
O'Malley, Brian


Allen, Scholefield
Griffiths, Rt. Hn. James (Llanelly)
Oram, Albert E.


Anderson, Donald
Griffiths, Will (Exchange)
Orme, Stanley


Archer, Peter
Hamilton, James (Bothwell)
Oswald, Thomas


Armstrong, Ernest
Hamilton, William (Fife, W.)
Owen, Will (Morpeth)


Atkins, Ronald (Preston, N.)
Hamling, William
Page, Derek (King's Lynn)


Atkinson, Norman (Tottenham)
Hannan, William
Paget, R. T.


Barnes, Michael
Harrison, Walter (Wakefield)
Palmer, Arthur


Barnett, Joel
Haseldine, Norman
Pannell, Rt. Hn. Charles


Baxter, William
Heffer, Eric S.
Parkyn, Brian (Bedford)


Beaney, Alan
Henig, Stanley
Pavitt, Laurence


Bence, Cyril
Herbison, Rt. Hn. Margaret
Pearson, Arthur (Pontypridd)


Bennett, James (G'gow, Bridgeton)
Hooley, Frank
Peart, Rt. Hn. Fred


Bishop, E. S.
Horner, John
Pentland, Norman


Blackburn, F.
Houghton, Rt. Hn. Douglas
Perry, Ernest G. (Battersea, S.)


Blenkinsop, Arthur
Howarth, Harry (Wellingborough)
Perry, George H. (Nottingham, S.)


Boardman, H. (Leigh)
Hoy, James
Prentice, Rt. Hn. R. E.


Boston, Terence
Huckfield, Leslie
Price, Thomas (Westhoughton)


Bottomley, Rt. Hn. Arthur
Hughes, Emrys (Ayrshire, S.)
Price, William (Rugby)


Braddock, Mrs. E. M.
Hughes, Hector (Aberdeen, N.)
Probert, Arthur


Bradley, Tom
Hughes, Roy (Newport)
Rankin, John


Bray, Dr. Jeremy
Hunter, Adam
Rees, Merlyn


Brooks, Edwin
Irvine, Sir Arthur (Edge Hill)
Richard, Ivor


Brown, Rt. Hn. George (Belper)
Jackson, Colin (B'h'se &amp; Spenb'gh)
Roberts, Albert (Normanton)


Brown, Hugh D. (G'gow, Provan)
Jenkins, Hugh (Putney)
Robertson, John (Paisley)


Brown, R. W. (Shoreditch &amp; F'bury)
Jenkins, Rt. Hn. Roy (Stechford)
Rodgers, William (Stockton)


Buchan, Norman
Johnson, Carol (Lewisham, S.)
Rogers, George (Kensington, N.)


Buchanan,Richard(G'gow, Sp'burn)
Johnson, James (K'ston-on-Hull, W.)
Rose, Paul


Cant, R. B.
Jones, Dan (Burnley)
Rowlands, E. (Cardiff, N.)


Carmichael, Neil
Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)
Sheldon, Robert


Carter-Jones Lewis
Jones, J. Idwal (Wrexham)
Shore, Rt. Hn. Peter (Stepney)


Chapman, Donald
Judd, Frank
Short, Mrs. Renée (W'hampton,N.E.)


Coe, Denis
Kelley, Richard
Silkin, Rt. Hn. John (Deptford)


Coleman, Donald
Kerr, Mrs. Anne (R'ter &amp; Chatham)
Silkin, Hn. S. C. (Dulwich)


Conlan, Bernard
Ledger, Ron
Silverman, Julius


Cronin, John
Lever, Harold (Cheetham)
Slater, Joseph


Cullen, Mrs. Alice
Lewis, Arthur (W. Ham, N.)
Small, William


Dalyell, Tam
Lewis, Ron (Carlisle)
Snow, Julian


Darling, Rt. Hn. George
Lipton, Marcus
Spriggs, Leslie


Davidson, Arthur (Accrington)
Lomas, Kenneth
Steele, Thomas (Dunbartonshire, W.)


Davies, Ednyfed Hudson (Conway)
Loughlin, Charles
Strauss, Rt. Hn. G. R.


Davies, Harold (Leek)
Lyons, Edward (Bradford, E.)
Swingler, Stephen


Davies, Ifor (Gower)
Mabon, Dr. J. Dickson
Symonds, J. B.


Dell, Edmund
McBride, Neil
Taverne, Dick


Dempsey, James
McCann, John
Thornton, Ernest


Dewar, Donald
MacColl, James
Tinn, James


Diamond, Rt. Hn. John
Macdonald, A. H.
Tuck, Raphael


Dickens, James
McGuire, Michael
Urwin, T. W.


Doig, Peter
Mackenzie, Gregor (Rutherglen)
Varley, Eric G.


Dunn, James A.
Mackintosh, John P.
Walker, Harold (Doncaster)


Dunnett, Jack
Maclennan, Robert
Wallace, George


Dunwoody, Mrs. Gwyneth (Exeter)
McNamara, J. Kevin
Watkins, David (Consett)


Dunwoody, Dr. John (F'th &amp; C'b'e)
Mahon, Peter (Preston, S.)
Watkins, Tudor (Brecon &amp; Radnor)


Edwards, Robert (Bilston)
Mahon, Simon (Bootle)
Wellbeloved, James


Edwards, William (Merioneth)
Mallalieu,J.P.W.(Huddersfield,E.)
Whitaker, Ben


Ellis, John
Manuel, Archie
White, Mrs. Eirene


English, Michael
Marquand, David
Whitlock, William


Evans, loan L. (Birm'h'm, Yardley)
Mason, Rt. Hn. Roy
Wilkins, W. A.


Faulds, Andrew
Mayhew, Christopher
Williams, Alan (Swansea, W.)


Fernyhough, E.
Mendelson, J. J.
Williams, Alan Lee (Hornchurch)


Fletcher, Raymond (Ilkeston)
Millan, Bruce
Williams, Mrs. Shirley (Hitchin)


Fletcher, Ted (Darlington)
Miller, Dr. M. S.
Williams, W. T. (Warrington)


Foot, Michael (Ebbw Vale)
Milne, Edward (Blyth)
Willis, Rt. Hn. George


Ford, Ben
Molloy, William
Wilson, Rt. Hn. Harold (Huyton)


Forrester, John
Moonman, Eric
Winnick, David


Fraser, John (Norwood)
Morgan, Elystan (Cardiganshire)
Woof, Robert


Freeson, Reginald
Morris, Charles R. (Openshaw)
Yates, Victor


Galpern, Sir Myer
Moyle, Roland



Garrett, W. E.
Neal, Harold
TELLERS FOR THE NOES:


Gourlay,Harry
Newens, Stan
Mr. Alan Fitch and


Gray, Dr. Hugh (Yarmouth)
Norwood, Christopher
Mr. Joseph Harper.

New Clause 51

AMENDMENTS TO SCHEDULE 17 TO THE FINANCE ACT, 1965

In sub-paragraph (3) of paragraph 4 of Schedule 17 to the Finance Act 1965 the words ' company and that other company' shall be substituted for the words ' three companies' in both places where they occur.— [Mr. Patrick Jenkin.]

Mr. Patrick Jenkin: I beg to move, That the Clause be read a Second time.

Mr. Deputy Speaker (Sir Eric Fletcher): I suggest that at the same time we take the Government Amendment to the new Clause.

Mr. Jenkin: The appearance of the Chancellor's Amendment to the Clause encourages me to move it extremely briefly. It is concerned to make a very minor amendment to the rules about dividend stripping, and I shall resist the temptation to describe at length to the House how those rules operate. Suffice it to say that they prescribe special treatment for dealings between associated companies, and the full rigours of Section 65 of the 1965 Act do not apply if certain conditions are satisfied.
Schedule 17 of the 1965 Act sets out some of the detailed rules and paragraph 4(3) of that Schedule deals with dealings between associated companies. However, the Schedule is rather strangely worded in that it is not only the selling and the buying company which must be associated, but also the company in whose shares the dealings are being made. It has been suggested to us that this is an unnecessary refinement and that the relaxation of the normal rules could equally well be applied if it were a company which was in no way associated with the transferor and transferee company, and the new Clause makes this very small but desirable change.
Perhaps I should indicate that the Amendment seems to us to be a reasonable improvement and we shall have no difficulty about accepting it. In the hope that with the Amendment the Government may be able to accept the Clause, I have pleasure in commending it to the House.

Question put and agreed to.

Clause read a Second time.

The Chief Secretary to the Treasury (Mr. John Diamond): I beg to move, as an Amendment to the proposed Clause, at end insert:
(2) This section applies to a distribution made after 10th April, 1968.
The hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) was as accurate as ever in describing the condition which the new Clause seeks to remove. It is a condition which at one time we thought necessary for the protection of the revenue where there was this group relief in connection with dividend stripping. We are prepared to believe that it is no longer necessary and in those circumstances I was happy silently to accept the hon. Gentleman's proposal. I have risen only to thank him for the way in which he has moved the Clause.
The Amendment, which he has indicated would be acceptable to him, is one providing for a starting date for the relaxation. Without a starting date, the matter would be open to some doubt. The date is the appropriate one, the same as has been taken for Capital Gains Tax changes in Schedule 12, which already in-includes one relaxation of the same dividend-stripping rules.

Amendment agreed to.

Clause, as amended, added to the Bill.

New Clause 77

VICTIMS OF NATIONAL SOCIALIST PERSECUTION

In the case of pensions or annuities payable to victims of National Socialist persecution by the Austrian Federal Republic, by any part of that Republic, or under Austrian social insurance legislation that part of the pension or annuity which corresponds to the ratio that the period credited to the victim free of contribution bears to the total period taken into account for the purpose of computation of the pension or annuity, shall not be regarded as income for any income tax purposes.—[Sir H. d'Avigdor-Goldsmid.]

Brought up, and read the First time.

Sir Henry d'Avigdor-Goldsmid: I beg to move, That the Clause be read a Second time.
I should perhaps begin by expressing my sincere gratitude to Mr. Speaker for selecting this small new Clause, and also to hon. Gentlemen on both sides of the


House for their patience in devoting themselves to a matter which involves only a small number of people. It is an honourable tradition that these matters are given the consideration of the House, even though the number of people affected is small.
The short object of this Clause is to bring the fiscal treatment of refugees from Nazi oppression who come from Austria into line: with that afforded to those who have come from Germany. The fiscal treatment of the former German refugees has been before this House on a number of occasions. My hon. and learned Friend the Member for Northwich (Sir J. Foster) moved a new Clause, seeking relief for them in 1957 which was negatived. In 1960 my hon. Friend the Member for Hendon, South (Sir H. Lucas-Tooth) moved a new Clause, very ingeniously phrased with a similar purpose, which was withdrawn.
It is clear that what was said on that occasion sunk in, because my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) introduced into his Finance Bill of 1961 a Clause which became Section 22 of the Act, and which performed the tasks for which permission of the House had been previously sought. Section 22(1) of the Finance Act, 1961, reads:
Annuities payable under the law of the Federal German Republic relating to the compensation of victims of National-Socialist persecution, being annuities which under any such law relating to the taxation of such compensation are specifically exempted from tax of a character similar to that of income tax, shall not be regarded as income for any income tax purposes.
Hon. Members may ask why this is not applicable to Austria. The reason is that the Austrian Government have not created annuities in such similar terms. It is not for me to inquire into the reasons governing the Austrian Government in this matter, but instead of agreeing to make these annual payments to the victims of Nazism the have preferred to make generous provision for them under their own State social insurance scheme.
They have deemed as fully paid the contributions which the victim would have paid, assuming normal conditions, had it not been for the war. The period for which the Austrian Government has made these contributions runs from 1933

to the fixed date of 1st April, 1959. Thus, a man who emigrated in, say, 1939, at the age of 30, and is now in receipt of a pension, finds himself receiving a pension based on 40 annual contributions, for some of which he may have paid before leaving Austria, some of which he may have paid subsequent to 1959, but 20 of which will have been credited to his account by the Austrian Government, without any contribution on his part.
This Clause seeks to ensure that the proportion of his pension which is covered by the Austrian Government's uncovenanted contribution is recognised by the Government as a form of indemnification for injustice inflicted on the beneficiary by the Nazis. On that basis, it is suggested that it should likewise be freed from British taxation. I would remind hon. Members that before 1961 it was agreed by the Revenue that indemnification payments made by the German Government to Nazi victims should escape British taxation. This refers to payments made by the German Government in respect of physical injury or damage to the health of the person concerned.
The view which the Clause seeks to put forward is that the unconvenanted proportion of this pension is a form of indemnification payment. It is recognised as such by the Austrian Government, and I hope that our Government will see it in this light, and agree that it should escape British Income Tax. I can tell the Minister of State that if he accepts this Clause, the number of former Austrian citizens living here who can expect to benefit is in the neighbourhood of 4,000. I also understand that the Austrian Government are prepared to furnish to the Revenue the relevant information about those individuals, so that correct assessments can be prepared.
During the 1960 debate my right hon. Friend the Member for Birmingham, Handsworth (Sir E. Boyle), replying on behalf of the Government, said:
This is matter which causes the Committee some disquiet. It is always a difficult position when, on the one hand, you may be creating an anomaly and a sense of injustice between one individual and another according to the tax code of our country, but, on the other, I recognise that Nazi persecution is something very different fortunately, from most things which the modern world has ever known."— [OFFICIAL REPORT, 22nd June, 1960; Vol. 625, c. 636.]


It was on the strength of that admission by my right hon. Friend, then replying on behalf of the Government, that my right hon. and learned Friend the Member for Wirral brought in the provision in the 1961 Finance Act.

6.0 p.m.

Mr. Taverne: The hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) has raised a very difficult matter which I am sure has the sympathy of the whole House. He has drawn a parallel with exemption tax on payments made by the Federal German Government which, on the face of it, is a parallel calling for action, although I am not sure whether on closer examination it is a real parallel.
We start with a general principle of tax law which is of some importance, namely, that receipts of an income nature are taxable, whatever their source. If one starts looking at the general question, it becomes extremely difficult to differentiate between different sources of income which often may be payments arising from the most distressing circumstances and to say that in certain cases the origin of the payments can be a ground for exemption and in other cases not.
On the face of it, there was an exemption in 1961 for certain victims of Nazi persecution which would seem to give rise, in principle, reason and logic, apart from grounds of sympathy, to the argument that exactly the same test should be applied to other victims of Nazi persecution. But the reason why this special provision was made in 1961 was not only out of sympathy for the victims of Nazi persecution, victims of perhaps the greatest crime this century has known, but also because of the special circumstances in which the annuity in which they were paid became payable.
The background to the matter is this. The Federal German Government made specific provision for exempting those to whom they paid compensation from their tax law. They said that there was a limited amount which they felt they could afford to pay, and, to increase the amount which they felt able to pay to the victims of Nazi persecution, they exempted the payments from their general tax laws and said that they should not bear tax. They then requested all foreign Governments in the countries in which other vic-

tims of Nazi persecution who received these payments resided to make similar exemptions in their tax law in respect of them.
The reason it was felt possible to depart from the general rule that one should not look at the source from which taxable payments come in deciding whether they should be exempt from tax was that in this case the amount was calculated on the basis that the payments should be exempt from tax and it was, therefore, agreed that they should also be exempted from tax in the United Kingdom. No such special circumstances existed for pensions or social security payments made by the Federal German Government payable to other people who happened to be victims of Nazi persecution.
In this case, the position is rather different. As the hon. Member for Walsall, South said, the Austrian Government have said that persons whose pensions would otherwise be greater but for the fact that they had not paid contributions at the time of Nazi persecution should be paid their pensions in full. But, as I understand the position, these pension payments in Austria are subject to the general Austrian tax law and there is no provision that they should be exempt from Austrian tax law. In that sense, they are in a different position from the special category of payments covered by Section 22 of the 1961 Act.
I understood that the number of cases involved was very small. I now gather from the hon. Member for Walsall, South that about 4,000 people are affected. In the past, the Revenue came across Austrians who had been compensated under Section 22. Although they were not former German subjects, the Revenue found that the cases were very few and the payments were very small, and any tax which might have been due was given up on the grounds that the case was not worth pursuing.
I shall look at that question again, but, on the general principle, there is a distinction between the 1961 case and this case. This is not an annuity paid in the same way which is exempt from tax. This is an ordinary pension made up to those who could not pay their full contributions. In that special case, there would not seem to be special grounds for changing the general principle when so often one gets circumstances in which,


under the law, the pension becomes payable but, nevertheless, the source for payment of an Income Tax nature cannot be looked at by the Revenue.

Sir H. d'Avigdor Goldsmid: Since I took part in the debates which I mentioned earlier, I am not surprised by the Minister of State's reply. We have heard before the arguments which he used. However, I am happy to hear that he is prepared to keep his eye on this matter. I cheer myself by looking at what my right hon. Friend the Member for Hands-worth (Sir E. Boyle), said when replying to a similar debate in 1960:
I can certainly give the hon. Gentleman the assurance that in all our future studies of this problem we will gain as much help as we can by considering the position of other countries …".—[OFFICIAL REPORT, 22nd June, 1960; Vol. 625, c. 637.]
My right hon. Friend did not give a pledge, but said that the problem would be studied. Because I regard the Minister of State's reply as not wholly negative, I beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

Clause 5

PURCHASE TAX

Mr. Taverne: I beg to move Amendment No. 185, in page 5, line 13, at end insert:
'and
(c) as from 1st July, 1968, with the amendment of group 24 by the addition after paragraph (4) of the exemptions of the following paragraph: —
(5) The following projectors namely—

(i) cinematograph projectors suitable only for film of 16 mm. width;
(ii) projectors suitable only for filmstrip;
(iii) cassette loaded loop projectors,

and parts and accessories suitable only for use with a projector of any of those descriptions"'.



I am somewhat embarrassed by not having before me the Amendment which one of my colleagues was to move. I move the Amendment formally, and my right hon. Friend the Chief Secretary can explain the reasons for it.

Mr. Diamond: I apologise for the fact that I was momentarily discussing

another matter when the Amendment was so ably and accurately moved by my hon. and learned Friend the Minister of State. There was only one thing which he did not make absolutely clear, and perhaps you, Mr. Deputy Speaker, could supply us with the information, namely, the precise number of the Amendment.

Mr. Deputy Speaker: It might help the House if I were to indicate that Mr. Speaker has suggested that with Amendment No. 185 we discuss Amendment No. 24 to Schedule 6, in page 55, leave out line 44.
Amendment No. 183, page 57, line 5, leave out 'and filmstrip'.
Amendment No. 180, page 57, line 7, at end insert:
(3) Automatic motorised film-editing machines for 16 mm. film, and with separate sound track.
Amendment No. 181, page 57, line 7, at end insert:
(3) 16 mm. cinematograph projectors.
Amendment No. 182, page 57, line 9, after 'width', insert 'filmstrip projectors'.

Mr. Diamond: I am obliged, Mr. Deputy Speaker, particularly because what you have said makes clear that my hon. and learned Friend was over-modest in withdrawing from the Dispatch Box rather than speaking to his own Amendment.

Mr. Taverne: I apologise—

Sir Stephen McAdden: On a point of order. May I ask whether the hon. and learned Gentleman has exhausted his right to speak?

Mr. Deputy Speaker: The Minister has the right to reply to any Amendment in his name. He is also in the privileged position of being able to speak more than once on Report. It would be right to ask the Minister of State to continue his speech.

Mr. Terence L. Higgins: Further to that point of order. May we know whether the Chief Secretary or the Minister of State is moving the Amendment? It is confusing if they bob up and down alternately.

Mr. Deputy Speaker: The Amendment has been moved by the Minister of State.


The Chief Secretary has spoken briefly and the Minister of State is making a second speech.

Mr. Taverne: I must apologise for an error which arose from Amendment No. 53, which I understood had considerable support but which was not moved.
The purpose of this Amendment is to exempt certain projectors specified in the Amendment. In Committee, I undertook to look at the question of certain projectors, particularly 16 mm. cine projectors and film strip projectors, which, it was argued, are largely used for educational purposes. We have found that outside the educational and industrial field the 16 mm. cine projector is used, for the most part, only by the advanced amateur who wants improved performance and by film-making societies. It is, therefore, clear that in the vast majority of cases the 16 mm. projector is used either in education or in industry for training purposes. It is, therefore, proposed to exempt them as a class.
The same is equally true of film strip projectors. Many of these slide projectors can be adapted to take film strip by an interchangeable carrier. It will, therefore, be necessary to confine the exemption to the projectors suitable only for film strip.
This is to some extent a matter which arises out of the other Amendments to be taken at the same time, but the nature of Purchase Tax is such that one cannot look at a particular purpose for which an object may or may not be used. At the time tax is imposed one does not necessarily know for what particular purpose the object will be used. One cannot say that, because in certain cases an object may be used for educational purposes, or has been used for educational purposes, but in other cases not, therefore it should be exempt from Purchase Tax and others should not be exempt.
Further representations were received in respect of the loop projectors which are widely used for training and educational purposes. These projectors are specialised for use with a distinctive type of cassette which enables a short run of film to be shown over and over again in a continuous loop, and can be regarded as a satisfactorily definable class for the purpose of exemption; because, of

course, if a class is definable as a class which, by its very nature, is likely to be used mainly for educational or industrial purposes, then it is possible to grant exemption.
During our proceedings the hon. Member for Worthing (Mr. Higgins) raised the question of overhead projectors, because, he said, these were also identifiable in the same way. I think that he described them as a kind of projector used by schools and institutions. I then said that I would make inquiries about what these overhead projectors showed and how far they would be covered by any exemptions we might be able to make. I should tell the hon. Member for Worthing that overhead projectors which show neither film nor conventional slides are not regarded as within the scope of the present charge on cinematographic film strip slide projectors, and, therefore, it is not necessary to provide any exemption in their case.

Mr. Higgins: It is unfortunate that there was some confusion at the beginning of the Ministerial statements on this point, because I am not entirely clear from what has been said whether, in discussing Amendment No. 185, 24, 183, 180, 181 and 182 together, if the House decides it will accept the first, the Government are proposing also to accept the other Amendments, which are being linked with it. That was not entirely clear from what the hon. and learned Gentleman said, because this area raises some appalling anomalies of the kind my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) so frequently draws attention to. We should be quite clear what the position is about the other Amendments.
As to the overhead projectors, the hon. and learned Gentleman said that these will not fall within the scope of this tax. I think it would be helpful to those who have to delve through the complexities and anomalies of Purchase Tax if he would make it clear under which other heading he feels these items come. It certainly was not clear in Committee that these items were not included in the list of cinematographic and other equipment to which the 50 per cent. Purchase Tax rate was intended to apply. Therefore, if he is going to make a statement from that Box that these items are not included in this tax category we want to


know in which category they are placed. We also want to know whether they will or will not be charged any particular tax so far as sales are concerned.
Having picked up those two points which arose from what the Minister himself said just now, I think there are one or two more specific points on which we also require clarification. It is perfectly true, as the Minister says, that the 16 mm. projectors are very largely used by other than private individuals. In Committee I quoted figures—educational establishments, 70 per cent.; churches 3 per cent.; industry; 10 per cent.; hospitals, 7 per cent.; other institutions, schools, private individuals, only 10 per cent. We can therefore see that there is here good reason for the Government accepting the Amendment proposed in Committee and moving this Amendment this afternoon. We certainly welcome the fact that this change is to be made.
6.15 p.m.
It is, of course, the case that the tax increase which was imposed on the group of items was something like 80 per cent. I would again ask the hon. and learned Gentleman to clarify the position. Am I right in thinking that these items will not now incur any tax at all because they are in the list of exempted items in the reformed category 24 in the Purchase Tax Act as it will now be amended —that is to say, this particular group of items mentioned in the Government Amendment will carry no Purchase Tax at all? This is not unreasonable, because it is, generally speaking, the case that items which are used for educational purchases do not bear Purchase Tax.
There is another point. In Committee we probed the reason why, in another Amendment, I think relating to calendars, the Government had inserted a date from which the Amendment should be operative. I think that is now incorporated in the Bill. The date applied was 20th March. We then got a subsequent Amendment, from 30th April.
Now this further Amendment is from 1st July, which, presumably, was the earliest date on which the Government's change of mind became apparent. Is this not rather unfair on those educational establishments and schools which, having heard that the Government had put up Purchase Tax on these items, but

perhaps deciding that, none the less, it was necessary to buy them, bought them and paid the 50 per cent. Purchase Tax on them, and now find, as the result of the Government changing their mind, on a case which we on this side have thought obvious in the first place, that if they had delayed their purchases they would have avoided the 50 per cent. Purchase Tax? What do the Government propose to do about anyone of whom it can be shown that he purchased these items between the date when the increase was originally announced and the date when now, it is suggested, the increase should no longer take place?
I want to pursue one or two other points, because this whole area is engulfed in confusion, and I think it is helpful if speeches made in this House can do something to clarify the position. The first question is about the 8 mm. projectors which the hon. and learned Gentleman mentioned. He rightly pointed out that most of these are used in connection with cassettes which are used by educational establishments. I think I would be right in saying, though I am not very expert in the technology of this, that there are some 8 mm. projectors which do not use cassettes. What is the position about Purchase Tax on those items?
Another point which arises here is the question of editing machinery covered by Amendment No. 180 in the names of my hon. Friends and my own name—automatic motorised film-editing machines for 16 mm. film with separate sound track. As I understand it, these are major items costing about £500 apiece. I would have thought they could scarcely be described as "accessories" within the terms of the Government Amendment. What is the position with regard to them? Are they to be exempt from Purchase Tax, or to incur the 50 per cent. rate?
There is another point which seems to create a very considerable anomaly. When we discussed this whole matter in Committee we tended to base our attack on the need to encourage audio-visual aids for educational purposes, and stressed the folly of the Government themselves in imposing 50 per cent. Purchase Tax on items of this kind which, anyway, are largely bought by education authorities and so on.
What is the position now? If the Government's Amendment is accepted, I understand that these items will not carry Purchase Tax at all. We are glad about that. But what is the position concerning related audio equipment which may form part of the same general complex used in the same general educational establishment?
There are a number of points here which need to be brought out. There was the point raised in Committee by my hon. Friend the Member for Petersfield (Miss Quennell), who has again tabled an Amendment concerned with the bulbs used in projectors. There seems to be a clear anomaly here. The Government were not going to tax magic lanterns, but would tax more advanced electrical projectors. My hon. Friend rightly queried what the position was. Are we to understand from what has been said this afternoon by the Minister that this anomaly is to be eliminated and my hon. Friend's Amendment accepted?
I make two final points. First, what is the position concerning rear projection screens? I am sure that the Minister will agree that it is unlikely that anyone using an ordinary film projection unit in his home would use a rear projection screen. These are typically used only in educational establishments. But again we are by no means clear whether they fall within the scope of the Amendment, so what is the position there?
Secondly, what is the position about 16 mm. films? It seems that the Government are now exempting all 16 mm. film projectors, but they are not, so far as I can establish, intending to alter the Purchase Tax rate on 16 mm. films which fall under paragraph 4(1) of the Schedule as now amended. It is somewhat difficult jumping back and forth from Clause to Schedule and then back to the parent Act and so on, but I understand the exemptions will not include 16 mm. films, whereas they will include 16 mm. film projectors. The films of standard width are exempt specifically in the Finance Bill on page 57, line 12,
cinematograph film of standard width.
Sould that now be amended to include 16 mm. films within the definition?
I apologise for wearying the House on what may seem to be a number of detailed

and trivial points. We do not believe that they are trivial. We believe that one of the main objections to Purchase Tax, as my hon. Friend the Member for Worcestershire, South consistently points out, is that the Government are in a morass of anomalies and contradictory definitions and the purpose of the Tax is becoming clouded. For that reason we are increasingly coming to the view that this is not a satisfactory Tax. At any rate, on this occasion I hope that the Minister will speak again and will be able to clarify the numerous points which I feel should be raised.

Mr. John Smith (Cities of London and Westminister): I welcome this Government Amendment, and so will my constituents, Mr. J. Wallace Heaton and Mr. Anthony Negretti, who are both proprietors of good firms which have rendered good service to this country; and who, being vigilant, have both written to me about it. But they and I will, nevertheless, remain disappointed that, even if we accept the Amendment, there is still in this Finance Bill a considerable measure of discrimination against the photographic and cinematograph industry.
But, if we are to have these Amendments introduced at a late stage, however desirable, to the Purchase Tax Regulations, it is extremely important that the Customs and Excise should be efficient. Traders have to make up their catalogues and are moreover liable to penalties for failure to charge Purchase Tax. Therefore, they must know as quickly as possible what Purchase Tax is due on what.
I have had several complaints about delays by the Customs and Excise in pronouncing on these matters over the particular types of equipment which are the subject of this Amendment. I select one out of several, which relates to bib recording tape splicers. This manufacturer says:
As a result of this year's budget, we received details from H.M. Customs and Excise that purchase tax had been introduced on tape splicers. This was re-confirmed by our local Customs and Excise office.
Following this, we published new price lists and altered advertisements. We then discovered that other makes of tape splicers were being sold without purchase tax, and immediately took the matter up with Customs and Excise Headquarters in London.


After some delay, they have now advised us that purchase tax is not applicable to our tape splicers.
I have another example here with which I will not weary the House. All this reinforces the point which I made in Committee, I fear out of order then, as it is now, that the lethargic and dilatory attention which is paid by the Customs and Excise to these important matters is no service to traders who could otherwise be helping the economy.
Therefore, I welcome the Amendment, but I urge the Government, if they are to amend the Purchase Tax Regulations, to see to it that traders know early exactly where they stand.

Sir G. Nabarro: Any reduction in taxation, even at this late stage in the Finance Bill, is a cause for joy in the hearts of all who complain continuously about the onerous burden of taxes in this country. But the fashion in which the Government are today dealing with Purchase Tax is really preposterous. This Schedule is now reduced to incomprehensible gibberish. I do not understand it; traders do not understand it; none outside the Customs and Excise understand it.
It is futile for my hon. Friend the Member for the Cities of London and Westminster (Mr. John Smith) to ask for explanations to be sent to traders. The more explanations sent to traders, in my experience of Purchase Tax, the greater the dubiety created because of the language employed in the explanations from the Customs and Excise and the greater the number of queries and interrogations directed against the Customs and Excise, with the result that Customs and Excise take advantage of every situation and place the Tax at the highest possible level on its own interpretation. If the trader disagrees he is entitled to take the matter to the courts. He rarely does, because of the expense and trouble entailed.
This Schedule, dealing with photographic equipment, has now become so highly technical in character that none, other than experts in photography, could possibly begin to understand it. I claim on those grounds that we shall need in the forthcoming months new publications from the Customs and Excise. I suggest a complete new glossary of all Purchase Tax setting out the rates, the articles to

which they are applied, and in terms that are easily understood by the trades involved in payment of Purchase Tax.
My hon. Friend the Member for Worthing (Mr. Higgins) has this afternoon asked a number of very difficult questions about photography which I could not follow. I do not know what the position is. The Government having presented this Schedule, then amended it, and no doubt in future they will amend it again by Order, tremendous dubiety now exists about the rate of tax applicable to any particular article of photographic equipment. We have now created, in one more great volume of manufactured goods, a state of affairs similar to that which has existed for several years relating to Purchase Tax on furniture, children's clothes, and many other articles where it is almost impossible to define the rate applicable to a particular article. Because children's clothes—and I mention this only in passing—are exempt from Purchase Tax, and because many women wear small sizes—

6.30 p.m.

Mr. Speaker: Order. We cannot discuss those anomalies. It is these anomalies about which we are talking.

Sir G. Nabarro: There is endless confusion in definition. Exactly the same will be the case with photographic equipment. In many instances it is impossible to define what is a piece of furniture, and what is a desk for educational purposes. It is equally impossible to define what is an ashtray, and what is a bowl.

Mr. Speaker: Order. I know the hon. Member's interest in all questions of Purchase Tax, but we are talking about only one limited aspect of it.

Sir G. Nabarro: This is all en passant to underline the difficulties which the Amendment will cause us all, good intentioned though it may be.
The only solution is the total reform of indirect taxation, and the substitution of a value-added tax for Purchase Tax and similiar forms of taxation.

Mr. Taverne: With the leave of the House, I hope that I might be allowed to reply to some of the points which have been raised.
The hon. Member for Worcestershire, South (Sir G. Nabarro) has pursued his


familiar theme. The value-added tax was not advocated with the same enthusiasm when his party was in power, but we realise that he objects to the many anomalies which arise in the application of Purchase Tax.

Sir G. Nabarro: My party consistently, over the years, made progress towards a single and uniform rate of tax, thereby preventing the kind of complexities which the Government are now heaping upon us.

Mr. Speaker: Order. We must come back to the Amendment.

Mr. Taverne: The most glaring anomalies to which the hon. Gentleman drew attention were left by the Conservative Government when they went out of office.

Sir G. Nabarro: Quite untrue.

Mr. Taverne: The hon. Member for Worthing (Mr. Higgins) asked whether overhead projectors were covered by a particular item. The answer is "No". On further inquiry they have been found to be outside the scope of the tax schedule. There is no item in the tax schedule on which Purchase Tax is levied which covers these overhead projectors, and they are exempt from Purchase Tax.
The hon. Gentleman also asked what effect the Amendment would have on the items listed therein. I think that that is reasonably clear. In group 24 there are three paragraphs of items which are exempt from tax. There is now added a fourth paragraph which includes the items which are the subject matter of the Amendment; and these are therefore exempt from tax.
The hon. Gentleman asked whether an 8 mm. projector which was not cassette loaded was covered by the Amendment. The answer is "No". It is the cassette loaded loop projector which is exempted. Other forms of loop projectors do not come within the exemption. The reason is that loop projectors are used with a distinctive type of cassette. These are in a clearly definable class, and are used mainly for educational purposes.
The hon. Gentleman then asked what the effect was of the other Amendments which are being discussed with this one. As regards the Amendment in the name of the hon. Member for Petersfield (Miss

Quennell), I undertook in Committee to make sure that the drafting was right. I am satisfied that it is, and that the various epidiascopes and parts and accessories about which she was concerned are exempt. There are specific exemptions for certain projectors and epidiascopes in 24 (i), (ii) and (iii) including parts and accessories suitable only for use therewith, and it is therefore quite clear that lamps which are suitable only for epidiascopes and projectors will still be exempt.
Amendments Nos. 180, 181, 182 and 183 are now covered by the Government Amendment, and I hope that the hon. Members who tabled them will be satisfied with what we have done.
I was asked about rear projector screens. Previously no representations were made to us either by the trade or by the Department of Education and Science that the dividing line was wrongly or inequitably drawn, and that rear projector screens were unfairly penalised. We are not aware that these screens are used mainly for educational purposes, which is what the Amendment is about. If it should turn out, perhaps as a result of some knowledge which the hon. Gentleman has, and of representations which he can make, that we should look at the position again, we shall do so, but we are not aware that rear projector screens are for the most part used for educational purposes. They therefore do not come within the scope of the Amendments.
The same is true of 16 mm. films. They are not exempted because the educational case, which is what the Amendment is about, refers essentially to projectors. Films can be purchased in large quantities by amateur photographers.
Lastly, I was asked why we had chosen the date of 1st July, and why this had not been made retrospective. It has always been accepted that we could not make Purchase Tax concessions retrospective. The 1948 experience was most unfortunate. The difficulty is to make sure that the tax rebate is passed on not only to the retailer, but, where the goods have been sold, to the final purchaser. In the past this has been found to be a formidable difficulty, and it still exists. Customers fail to understand that in certain cases tax is not paid on stocks on the retailer's premises at the time of the


Budget. They are convinced that they are entitled to repayment of the tax which has been remitted. Apart from the problem of identifying a particular purchase as falling inside or outside the retailer's pre-Budget stocks, there will always be room for argument, in the former category, about whether the prices have been adjusted on account of the tax. It has been found impossible to trace the tax back into the hands of those who may or may not have paid it. For those reasons it has been found impossible to make any of these Purchase Tax concessions retrospective to the Budget date.

Amendment agreed to.

Mr. David Lane: I beg to move Amendment No. 98, in page 5, line 13, at end insert:
(c) as from 30th April 1968 with the amendment of Group 19 by the insertion after the words 'gramophone records' of the words' except gramophone records used for educational purposes' and the insertion at the end of paragraph (b) of the words 'gramophone records used for educational purposes'.
As this is the first time that I have ventured into the jungle of Purchase Tax in these debates on the Finance Bill, I hope that the House will bear with me if I stray off the track at any point.
I was not a member of the Standing Committee, but I understand there was a general feeling that the position about gramophone records was unsatisfactory, and on reflection I believe that we have a chance to improve the Bill in a small but important respect. As I understand it, the effect of the Clause is that the rate of tax on gramophones, radiograms, and some other instruments is to be raised from 27½ per cent. to 33⅓ per cent., but the tax on all gramophone records is to be raised from 27½ per cent. to 50 per cent. The purpose of the Amendment is to bring back into the lower category—the 33⅓ per cent. category—gramophone records used for educational purposes.
In the light of what was said by hon. Members on both sides in Committee we want to find a common-sense dividing line which would lessen the burden on all sorts of records which none of us wishes to see penalised to the full extent of the 50 per cent. level which is now to apply. We have tried to draw this distinction according to end-use—that is, use for

educational purposes. It seems the simplest way to take out of the higher penal range records that most would agree should bear a lower rate of tax.
I put forward this case on two grounds. First, without going into the argument of a high luxury level of tax being imposed on any gramophone records—which is not the purpose of this debate—it is absurd to apply this high luxury rate to records used in schools and universities, and for many other purposes that we can all describe—and know what we mean by describing—as being for educational purposes.
There is an increasing use of teaching by gramophone records at all levels. Further, many libraries—both public libraries and libraries of educational institutions—contain gramophone records, and unless we do something to remove this very high level of tax from records in these categories it will have a discouraging effect not only on the main business of education but on all that is being done to develop wider leisure opportunities for many members of the population.
The second argument is a more general one. Under this Government the education system has suffered one blow after another in the last three years. Surely the Government can take this opportunity to give at least a small pat of encouragement to the education world.

Mr. Kenneth Baker: Without the Amendment the Clause puts all gramophone records, including educational records, into the luxury class of items for Purchase Tax purposes—the same class as jewellery, furs, and so on. The rate of tax upon educational records is four times that payable on the Savile Row suit made for the hon. Member for Worcestershire, South (Sir G. Nabarro).

Sir G. Nabarro: Your hon. Friend.

Mr. Baker: My hon. Friend. It is absurd to tax educational records, or records used for educational purposes, at this high rate, and the Amendment would reduce the rate.
When we discussed this matter more generally in Committee the Treasury Ministers said that they could not distinguish between different categories of record, and that it was impossible to distinguish educational records. Whole


catalogues of educational records exist. They are generally, although not in all cases, prepared with the home student in mind—somebody who wants to learn a foreign language or a commercial skill.
The catalogue which I have here caters for several commercial skills which I could recommend to Treasury Ministers. There is elementary book-keeping, budgetary control and, finally, a course in liquidation and receiving. These records are being sold and used much more frequently today by students studying not only at home but at college, and it is most unfair to discriminate against them. This extra tax will put these educational records beyond the purses of some students, and we should not on any occasion place any hindrance in the way of a person who is seeking knowledge.
The previous Government Amendment gave special treatment to film strip projectors used for educational purposes, and I ask the Government to use the same standards in discussing this Amendment.
Furthermore, the company that produces these records also exports them. I need not rehearse the arguments which have been put forward to the effect that in order to have a good export trade there must be a sound home market. That is an additional reason why we should give special treatment to this category of gramophone records. In brief, they can be identified, and they are directed particularly to those who want to learn something. We should not put anything in the way of such people.

6.45 p.m.

Mr. Stanley Henig: I have some sympathy for the aims of the Amendment but I cannot support it, for a number of reasons. It is true that certain companies exist to make educational records, in the narrowest sense of the term, and no doubt learning a course in liquidating and receiving would fit easily into such a category. But it is not so easy to draw the line in respect of records which are made of literary works, such as plays by Shakespeare. One of the best and most enterprising of our record companies specialises in producing records of this nature, and it would be logical to suggest that that company should also be exempted from the extra Purchase Tax.
Many people listen to such records for pleasure, and much the same argument can be applied to any gramophone record. The vast bulk of gramophone records could be conceived of as having an educational purpose, and if this argument were accepted it would mean that the Amendment, in logic, would provide that the extra tax should be removed from all gramophone records.

Mr. Joel Baroett: Hear, hear.

Mr. Henig: Many people—apparently including some of my hon. Friends— would welcome such an action, and in another year I' might join my hon. Friends in pressing this course upon my hon. and learned Friend. But it seems to me that a time when we are trying to raise taxation in a variety of ways is hardly the moment to go in for special pleading.
One point is relevant to the Amendment and to the debate on this subject. People talk about the record industry and records in general as if they were part of some great monolith, and as if there were a standard price for all records, which was being increased by 22½ per cent.—

Mr. Speaker: Order. In discussing this Amendment we cannot raise the question whether the increase in Purchase Tax should be applied to gramophone records in general.

Mr. Henig: The increase of 22½ per cent. does not apply to the full sum charged for the record, in the sense that in the record industry the margins made by the retailers are very high, so that the actual increase works out at much less than 22½ per cent. of the total price of the record. In recent years a differential structure has grown up in the price of gramophone records—

Mr. Speaker: Order. The hon. Member cannot discuss the question of Purchase Tax on gramophone records in general. That has been discussed elsewhere. It is not selected for discussion now. The question is whether we exempt from the increase in Purchase Tax educational gramophone records.

Mr. Henig: I understand that, Mr. Speaker, but if we accept the argument


which I am putting forward that a gramophone record of Beethoven's Fifth Symphony is educational if it is played to schoolchildren, to people at university and even to older people, we must, in logic, look at the effect of this increase—

Mr. John Smith: Surely what the hon. Gentleman is saying is that something is not educational if one enjoys it—it is as simple as that.

Mr. Henig: I have not put forward that argument. I am saying that the definition of "educational purposes" put forward by hon. Gentlemen opposite means people learning or taking a course and listening in schools. I have been trying to widen the argument by suggesting that this exemption cannot be made because the demarcation between educational and non-educational purposes is— as the hon. Member for the Cities of London and Westminster (Mr. John Smith) more or less implied—virtually non-existent. The deleterious effect on education of this increase in the tax on all gramophone records will not happen because of the differential price structure in the industry which results in whole categories of records going from one price tier to a lower one. There are three distinct tiers.
In discussing educational records, we should remember that the companies are most anxious, as far as possible, to increase their sales for the optimum profit. This is one reason that they have introduced lower price tiers. But that, in effect, means that they are lowering the average price for all records. In other words, it is not so much culture or education which is taxed as, very often, some of the bigger record companies themselves.
That leads me to the final argument put by the hon. Member for Cambridge (Mr. Lane), that, if one taxes heavily companies producing educational records, it somehow damages their export prospects. Only in the last few weeks, the Financial Times and some of the recording magazines have reported that, during the last six months, British exports of all kinds of recording material, including educational records, have risen strongly. I am not sure how my right hon. Friend will react to this, but it also appears to be the case that, since this

increase in Purchase Tax, there has been little sign either of the home demand for any records slackening.
Thus, as well as the Amendment being unworkable in fact, because one cannot differentiate between educational and other purposes, it does not matter in practice, because the kind of effects which hon. Gentlemen suggest on people's desire and need for culture have not occurred and there is not much sign that they ever will. I am sure that my right hon. Friend will regret that, in some ways, but it is a fact of the situation.

Mr. Peter Kirk: I hope that the Minister of State will produce a slightly more convincing argument than that of his hon. Friend the Member for Lancaster (Mr. Henig), who did not seem to be able to define in his own mind what is education, and rejected the helpful suggestion of my hon. Friend the Member for the Cities of London and Westminster (Mr. John Smith).
It is clear that, if one approaches this matter in the way that my hon. Friend the Member for Cambridge (Mr. Lane) did and regards this as the end use of the product and not the product itself, it should be possible for the Customs and Excise to work out a reasonable system. I hope that the Government will be able to accept the Amendment, which is small in scope and carries out a very much-needed reform of the Bill.
My hon. Friend the Member for Acton (Mr. Kenneth Baker) said that education had taken a good beating from this Government already. Educational appliances have taken a good beating in this Budget. I have sent to the Chancellor details of other matters, like mobile sound guides for use in museums and country houses, which have had a 50 per cent. Purchase Tax slapped on, and which previously paid none at all. It seems right that the Government should make some amends on this.
I have had many representations about this, particularly from university students in my constituency, who find that, contrary to the experience of the hon. Member for Lancaster, this places an additional burden on them in their studies. It is true of other matters as well. I had a representation from a blind person who is learning languages by means of a radiogram—almost the only way, she


says, that she can do it—and the additional burden on her may not be very much in the terms of the hon. Member for Lancaster but it means a good deal to her, and may mean that she will not be able to continue the course.
I do not know how much this modest Amendment would cost the Chancellor. I cannot believe that, in a year when an additional £900 million is to be raised, it will be so excessive as to wreck the whole deflationary approach of the Budget. For that reason, I join my hon. Friends in pressing on the Minister that this matter should be considered again. It has caused a great deal of alarm. There has been considerable correspondence in the Press and to Members of Parliament and it is a small piece of virtue which the Government could store up for themselves against the bad times which lie ahead for them.

Sir Harmar Nicholls: I agree with my right hon. Friend the Member for Saffron Walden (Mr. Kirk): of course this can be done if the Treasury Bench wish it. Of course it can be identified and put in acceptable terms in the Bill. I hope that the Minister of State will consider the Amendment with sympathy. I thought that the speech of the hon. Member for Lancaster (Mr. Henig) was the best example I have seen to date of why the ex-Minister of Power resigned. That is the sort of argument and narrow approach which seems completely to disregard practicalities. I should be completely opposed to what appeared to be the hon. Member's interpretation.
When the Amendment is being interpreted, after the Minister has accepted it—as I hope that he will—I hope that the interpretation of "educational purposes" will cover some of the points which the hon. Member said should not be included, for all sorts of reasons which I could not understand. Certain gramophone records can be clearly identified as educational. A good example was that which my hon. Friend gave, of a blind person wanting to learn languages. It must be interpreted rather wider than the sheer, easily recognised "educational purposes". Otherwise, we shall be illogical.
The Minister of State, Department of Education and Science, who has responsibility for the arts, is getting a great deal

of kudos—in many cases rightly—for the encouragement which she has given to ballet, operatic music and Shakespeare. We are giving great subsidies—I am not one of those who grumble at it—for all these works to be performed on the stage and at ballet schools, and it is money well spent. But the only taxpayers who can enjoy the result of those subsidies are those who can travel to the theatre. If we want to extend culture and the whole idea of spending money on the arts so that they can be embraced and enjoyed by a large proportion of the population, we should face the fact that, in this day and age, it is part of the educational distribution to have them on gramophone records—

Mr. Henig: Would the hon. Gentleman then make it clear that, by "educational purposes", he means every gramophone record except the "Top of the Pops"? If this is what he is saying, will he say it loud enough for everyone to hear?

Sir Harmar Nicholls: I was about to say how I think the interpretation should be based, and I will come a little more quickly to that suggestion.
I suggest that, when we are trying to interpret the Amendment, we should say that any work, whether music or words, which carries with it in its normal usage a Government subsidy, whether it is operatic music, ballet music, or the works of Shakespeare in the theatres, the National Theatre and the ballet schools, should qualify under the definition of "educational purposes". Otherwise, on the one hand we would be saying that we give these vast subsidies to encourage people to enjoy and use these works, and on the other would be making it more difficult, because more expensive, for them to do it in their own homes. I rather enjoy the "Top of the Pops", too, but I am not arguing in this instance—I should, in any event, be out of order to do so—that there is a good case, for export and other reasons, for not putting the extra tax on those records. For the purpose of the Amendment, we have to accept that any music or any work which does not attract the subsidy which makes it desirable in the eyes of the Government, ought not to be exempted.
7.0 p.m.
The Amendment ought to be accepted, perhaps not in its present words, which


might not do what I am asking or what the Government would like to do, but certajnly in spirit, with the promise that appropriate words will be introduced later to exempt educational records and any records which represent work which normally carries a subsidy from the Government. For example, any works which the Minister responsible for the arts helps to keep alive by means of a subsidy should be exempt if they are translated on to a record. They should have the same sort of encouragement as that given by the subsidy.
I support the Amendment, hoping that its spirit will be accepted now and that a promise will be given to introduce later words which will give an interpretation of "educational". If the Government will do that, they will avoid being illogical in encouraging with the one hand and discouraging with the other.

Mr. James Dickens: I am sorry that I missed the early speeches in the debate, but I am familiar with the argument because the point was debated in Committee.
I rise to give my general support to Amendment No. 98 and to its purpose, which is to make some differentiation between gramophone records for educational purposes and gramophone records in general terms. It is, of course, difficult to make a precise differentiation which would exclude, for example, records of classical music or other records of various theatrical performances from the general run of records produced for entertainment purposes. We could not accept the definition offered by the hon. Member for the Cities of London and Westminster (Mr. John Smith).
But we can differentiate in two importants respects. For example, we can clearly distinguish those records which are produced for a course of study, as with language records, which have an increasing use both in exports and elsewhere. That applies to the spoken word, too. There are certain courses of instruction which can be distinguished. For example, there is a course of records on early English, dealing with Chaucer and including "The Canterbury Tales" in early English, with text books issued as part of the course.
I can see no difficulty whatever in the Board of Inland Revenue clearly differentiating those records from the general body of recordings in this country and agreeing that records produced for those purposes, with text books, should be exempt from Purchase Tax. Consequently, I support the general drift of the Amendment on the Floor of the House, as I did in the debate in Committee.

Sir G. Nabarro: This subject was debated in Committee, but I was not a member of the Committee. I intervene for only a few minutes to draw attention once again to the preposterous state of affairs which exists today with the Purchase Tax Schedules. The Government propose to tax gramophone records at 50 per cent. They tax musical instruments at 33⅓ per cent. Why is a gramophone record 50 per cent. more luxurious than an oboe or a harp or a pianola?

Mr. Speaker: Order. The hon. Member cannot debate on the Amendment whether gramophone records should be subject to increased Purchase Tax. We are discussing an Amendment which seeks to exempt educational records.

Sir G. Nabarro: I was coming to educational records, Mr. Speaker. The records taxed at 50 per cent. will include educational records, which makes the anomaly even worse.
But the true analogy is between a gramophone record of an educational character and a book. These are the two essential media for educative processes which ought to be compared, the one with the other. I notice that the hon. Member for Lancaster (Mr. Henig) is laughing. One of my hon. Friends suggests that he took a course in it. But the course has not had any very obvious results. Educational gramophone records and books are exactly comparable. We do not tax books at all. We are to tax educational gramophone records at 50 per cent. It ought to be possible, on the lines generally laid down by my hon. Friend the Member for Peterborough (Sir Harmar Nicholls), to extract from the generality of gramophone records those which are generally applied for educational purposes, in universities, colleges, schools and educational establishments of all kinds, making one large group.
There is another large group of educational gramophone records used for teaching languages in the home. There are—I have never employed one, because I am so bad at languages—special institutions in London which specialise in the teaching of languages through the medium of educational language records. I am informed that they are very good. Clearly they would be subject to a special Purchase Tax rate or, for preference, no Purchase Tax at all. There are ways and means of doing this, and, while it is not a method which I like very much, because it is taking us further and further into the realms of discrimination in Purchase Tax, which I think is wholly bad, if we are to have foisted on us by a Socialist majority a 50 per cent. rate of tax on all gramophone records—which is a step never taken by the Tories—I would seek to make it a little better by taking educational records out of that general rate of tax applicable to all records.
When he winds up the debate, I hope that my right hon. Friend the Member for Birmingham, Handsworth (Sir E. Boyle), the Shadow Minister of Education, will make it clear that we feel strongly about this matter. Fiscal niceties apart, we feel strongly about that in an educational sense. I hope that he will invite us all to join him in the Lobby in voting in support of the Amendment, if we obtain no satisfaction from the Treasury Minister.

Mr. Taverne: There is a fundamental difficulty about this whole matter. In the earlier Amendment moved by the Government we took special categories of photographic equipment which, by their very nature, were suitable only for educational use or were used largely for educational purposes. This Amendment seeks to exempt gramophone records used for educational purposes.
Purchase Tax is imposed when the objects are in the hands of the wholesaler or retailer, and at that stage neither Customs and Excise nor the retailer know the purpose for which a particular object will be bought. A retailer cannot say whether a record will be sold to a teacher or to a pupil. Indeed, when he has stocks of records, in most cases he does not know whether they are records which will be used for educational purposes. It is impossible for Purchase Tax to be

imposed or to be exempted depending on the actual use to which particular items may later be put. That is a fundamental objection to the Amendment.

Mr. Frederick Silvester: The hon. Gentleman will be aware that Customs and Excise already make an exception for the import of U.N.E.S.C.O. material for educational purposes. The order provides that exemption from import duty will be granted provided that they are satisfied that the goods so produced are of an educational, scientific or cultural character. Why cannot this case be dealt with in a similar way?

Mr. Taverne: The hon. Member will find that such exemption from import duty is given where U.N.E.S.C.O. certify that these are records which are produced by U.N.E.S.C.O. for a particular purpose. They can be clearly identified as having been produced for a particular purpose. One cannot say whether or not a classical or any other kind of record will be used for educational purposes. One cannot say whether it will be sold to a school or enjoyed at home. I am not denying that many records have educational value, but this is not what the Amendment has in mind. The Amendment has in mind records to be used in schools, universities or similar institutions.

Mr. J. E. B. Hill: On the Minister's own showing, it should be possible to distinguish the sale of records to schools, since the record industry, as far as I am aware, has no wholesaling arrangements. Most orders have to be sent to the recording company. Surely, educational institutions could make sales direct so that it would be possible to identify the records as sold for educational purposes through educational institutions only.

Mr. Taverne: This is not a matter of administration. Records are taxed at a stage when it is not necessarily known for what purpose they are to be used. It would mean that where in a large concern stocks are held or particular records are sold those records would have to be left out altogether since at that stage the destination of the records would not be known.
The hon. Member for Peterborough (Sir Harmar Nicholls) chided my hon. Friend the Member for Lancaster (Mr. Henig) for being unpractical, but his


approach was eminently practical and was concerned with the practical difficulties. It has been said that there are lists of educational records, but the records which are the subject of such lists are equally records which can be used for non-educational purposes. There are also many records not on the lists which could be used for educational purposes.

Mr. Kirk: Will the Minister say how he would use a language teaching record for non-educational purposes?

Mr. Taverne: There are certain records which perhaps could be said to be educational only, but the vast majority of records are not in that position. One could give many examples of almost any kind of record which could be used for educational purposes. Records can be used in schools for illustration; classical records can be used for educational purposes; one can illustrate in teaching music different kinds of music making; such records can all be used for educational purposes.
The hon. Member for Saffron Walden (Mr. Kirk) asked me what would be the cost of this concession. It is impossible to say what the cost would be, since almost any record could come within this definition. The only way in which this problem could be approached would be if one could exempt records which were suitable only for educational use. That is not what the Amendment does.
I said in Committee that I would look at the problem. I said that there would be difficulties in the anomalies that would be created, but nevertheless, if it were possible to isolate records which by their nature were suitable only for educational use, and if this did not lead to unacceptable anomalies, then we would examine the possibility of exemption.
The hon. Member for Worthing (Mr. Higgins), in Committee, referred specifically to language records, and asked us to consider as educational records those involving speech. One could perhaps say that language teaching records would be for educational purposes only. The concession had it been made would have had to be confined to records designed to form part of a course of instruction in language. There would have been considerable difficulties about this, but I cannot argue that it would have been administratively impossible. However,

this would have been a concession which would have been strongly resented when other types of records also used for educational purposes would not come within that special category.
This was suggested by the hon. Member for Worthing when he put it more widely and referred to records involving speech. It is understandable that he should put it in that form, since records involving speech would be the way in which many people would want to approach it. That would include anything from a Shakespeare play to a music-hall turn. It would be impossible, without creating tremendous anomalies, to confine a concession to, say, language records or to records suitable only for educational use.

7.15 p.m.

Mr. Robert Cooke: Is the Minister able to give an example of a music-hall turn involving speech only which has been issued as a gramophone record?

Mr. Taverne: One would then have to say it should be speech without music. I can tell the hon. Member of records similar to music-hall turns which have been made by some of our eminent satirists involving speech only. It requires no great effort of imagination and very limited research to find long lists of records which involve speech only and which are in the nature of music-hall turns. However, the Amendment as it stands is not concerned with records suitable only for educational purposes. The Amendment would, therefore, be quite unworkable in practice and for that reason I must ask the House to reject it.

Sir Edward Boyle: I am sure that the House is grateful to my hon. Friends who put down the Amendment, and in particular, to my hon. Friend the Member for Cambridge (Mr. Lane), who proposed it. I realise on listening to the debate that many hon. Members very pardonably wished we could have had a wider debate on Report covering the whole subject of Purchase Tax on gramophone records. I was not a member of the Standing Committee, and I am glad we have had this opportunity of attention to this more limited aspect. It is right that we should be considering this matter. As my hon. Friend the Member for Saffron


Walden (Mr. Kirk) said, educational appliances have taken a beating from the Government.
My hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) was right to draw a contrast between the treatment of gramophone records for educational purposes and the treatment of books. It is also worth remembering that one must look at the problem faced by schools in the context of the Government's policy as a whole. Not only is there a steep increase in Purchase Tax, but the Government's policy on the rate support grant must mean that the local authorities and indivdual schools are in considerable difficulties when purchasing gramaphone records which are so important in an educational context.
I have listened carefully to the debate. I understand the view of the Minister of State when he says that records have to be taxed at a moment when their end use is not necessarily known. I recognise that there are difficulties about those gramophone records which can be used either for educational or for entertainment purposes. None the less, I agree with the view of the hon. Member for Lewisham, West (Mr. Dickens) that there is scope for differentiation. I agree with my hon. Friend the Member for Saffron Walden that surely we can work out a viable approach to the problem.
Constantly I have heard Finance Bill debates in the House, and I have even taken port in them, where the Government begin by saying that there is no solution to an administrative difficulty, but by the time there has been sufficient pressure from the House and outside it has very often happened that the administrative difficulty has been avoided, at any rate to a certain extent.
I felt disappointed by the Minister's reply. I believe that there are categories of records, some of which have been mentioned, which can clearly be identified as records for educational purposes and for no other purpose. I will mention three examples. The first is records concerned with the teaching of languages. My hon. Friend the Member for Saffron Walden, who is a much better linguist than I am, pointed out that one does not have these records for entertainment purposes.
Then, as the hon. Member for Lewisham, West pointed out, there are those records produced in connection with definite courses of study. I would add another feature which overlaps that category. It is not only those records which are designed with a course of study, but those which are—[Interruption.] Does my hon. Friend wish to intervene?

Sir G. Nabarro: No.

Sir E. Boyle: Though it is some time since I have taken part in a debate on the Finance Bill from the Front Bench, there were years when I got used to interjections from my hon. Friend in his earlier incarnation.
There are considerable numbers of records issued by companies to illustrate books produced for educational purposes, where a two-volume or three-volume manual of poetry is associated with gramophone records so that children can not only read and learn the poems but hear them performed. I believe that it would be possible to identify a considerable number of recordings as recordings purely for educational purposes.
I think that the Minister of State gave the real reason for the Government's refusal to move on this subject when he said that, although he agreed that there were records which could be identified in this way, he was afraid that this might be the thin end of the wedge. That is often the least persuasive type of argument to use with the House. In an administrative decision, there will be marginal cases, but I am convinced that there are a number of types of recordings, some of which have been referred to in the debate, which can be clearly identified as educational recordings.
The House has a good deal of business before it. We may not wish to devote more time to this matter now, but I feel sufficiently disappointed with the Minister's reply to advise my hon. Friends to divide on the Amendment.

Mr. Silvester: I am sorry to pursue this matter further, but the Minister's reply does not satisfy me. He said that the criterion was to be records which can only be used for educational purposes. I would remind him that his


criterion was somewhat different in regard to cinematograph projectors, in connection with which the Government produced Amendment No. 185. A projector did not have to be used only for the purposes denned, but it did in the majority of cases.
We are not suggesting that one can define perfectly records which will be used for educational purposes, and only for those purposes. We are saying that for most normal, sensible people there are categories of records which the vast majority of us are sure will be used on most occasions for educational purposes. Although the Treasury may lose a small amount of money on those which happen not to be put to educational uses, it could well afford it because the sum is so small.
May I take the Minister back to another point about the U.N.E.S.C.O. Order? He is quite right in saying that the paragraph which concerns records refers to records produced by U.N.E.S.C.O. and is, therefore, defined. But there follows a paragraph concerning films. As I read it, that is not limited to U.N.E.S.C.O. but is concerned with an internal Ministry. It says:
Import duty shall not be charged on any film, with or without soundtrack, which is certified by or on behalf of the Minister of Education to be of an educational character.
It seems to me that there is a specific instance where the Government already accept that the Department of Customs and Excise, using the agency of the Minister of Education, can define a film in educational terms, and I cannot see why it is beyond the wit of the Minister to devise a similar system whereby records sold in this country cannot be similarly defined.
I do not suggest that it will be perfect, and no doubt many hon. Members, newspapers and others outside this House will be able to find anomalies and make fun of it. But at least we will get at the great bulk of educational records, which is what we are seeking to do. I would ask the Minister to think again. I know from what was said in Committee that the Government do not disagree with the principle. They say that it is beyond their understanding to devise an administrative system. But it is their duty to do so to give effect to the wishes of the House. I urge them to get on and do it.

Mr. J. E. B. Hill: Having heard the arguments put forward by my right hon. Friend the Member for Birmingham, Handsworth (Sir E. Boyle), I hope that the Government will think again. I am quite sure that, if there is a will here, a means can be found, whichever way one looks at it. If it is purely a question of identifying categories of records, surely the spoken word can be equated with the printed word, as my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) has urged.
Will it really be a great loss to the Revenue and a national disaster if a number of people who are not schoolboys or students buy records of Shakespeare? If that should happen, surely it would not be all that bad for the Treasury and the nation. I think that the recorded word can be put on the same footing as the printed word.
Then, as regards music, if a satisfactory definition were put forward by the Government, though admittedly it is difficult, it would be possible for recording companies wishing to fulfil the demands of education authorities for cheaper records so to make records in future that they came within the definition. It would be possible to record pieces of classical music for the public in general to enjoy and to re-record them for schools with a commentary attached. Such a record would be acceptable to a student, whereas it would be quite intolerable to listen to it in one's home. Nothing is done like that now, because there is no call for it, but I would ask the Government to think in terms of developments within the industry which might come forward to meet such a concession.
The whole argument put forward by my right hon. Friend about the burdens on education must be taken seriously by the Government. It is obvious that, with the financial pressures at work on education, nearly all the cuts will come at the margin, and some of the more pleasant parts will be omitted. The records and visual aids which are used form part of the capitation allowance, and they will be cut out. It follows, too, that if language and other educational records become more expensive to students and schools, some of the classical records which could be used for non-educational purposes will not be bought


by schools and, therefore, the damage is cumulative.
In view of all the criticism in favour of trying to make it easy for schools to use gramophone records as a means of education, I hope, therefore, that the Government will think again. When they think again—and I prefer to say "when" and not "if"—would they consider the whole range of educational recordings? If the Minister is to think about the need to bring in educational gramophone records with a satisfactory definition, would he also think of educational recorded tapes, because they go together?

7.30 p.m.

Mr. Kenneth Lewis: I was a little concerned that the Minister should suggest that a very serious speech that might be made by my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) should be put in the same category as a comic turn, and that the tax on a record of his speeoh should be the same as that on a record of someone entertaining the public.
I thought that the Minister accepted our case. He accepted that there was a reason for differentiation between the tax on a record made for entertainment and that on an educational record. He accepted the case, but said that nothing could be done about it because there was likely to be an administrative difficulty. I understand that the Chancellor said in his Budget speech that he believes that over a number of Budgets it is desirable that we should get away from increasing Income Tax and go over to increasing Purchase Tax and sales taxes. We on this side of the House have clearly said that we believe that there should be reductions of taxes on income and increases in taxes on spending. If Governments are to do that, the Treasury must find an administrative means by which categories of purchases by individuals, societies, industry or anyone else are exempt or have a lesser tax.
If the Government do not accept that, and taxes increase by 50, 70 or 80 or even 100 per cent. not only will articles bought for entertainment or popular use not concerned with education rise to a very high price but so will records and other objects which the public buy for their

edification and education. If Purchase Tax increased right across the board people would be dissuaded from buying educational objects, whether records or anything else, which it was clearly in the public interest that they should buy. Language records, records of Shakespeare, records of poetry readings, which are now becoming more popular, records of our best orchestras and the like would not be sold because they would be clobbered with high taxation, which Governments did not intend to impose on them but really intended to impose on popular articles which they wanted to dissuade the public from buying. The Treasury must find an administrative means of securing such exemptions.
It is also necessary for it to do that because many societies are now making money through selling records. The Government and local authorities are frequently asked to subsidise orchestras. The Bournemouth Symphony Orchestra has been subsidised for many years, and so has the Halle Orchestra in Manchester. No one would wish them to go out of business. They depend very largely on selling their records and they have a limited public. The records are educational, though it is true that there are a few people who enjoy listening to them.
A Government with a "Minister of Arts", who receives an allocation from the Treasury, should aim to encourage the sale of those records. We may not yet have reached the position, though we are very near it with a high Purchase Tax. of 50 per cent., where people who want such records will not buy them. But it will be a very difficult decision for them, if Purchase Tax goes up across the board, as to whether they can afford to buy a record or to buy something else.
If such records and other items in future Budgets have imposed on them another considerable increase in Purchase Tax we shall reach the position where the public will not choose to buy that which will educate it and that which the "Minister of Arts" is trying to encourage people to buy. This will have on effect on orchestras and societies which at present are having a difficult time, because the revenue from their record sales greatly assists them at present. That revenue also assists the Government because if the orchestras and societies secured more revenue from the sale of


records they would find it less necessary to ask for an increased subsidy. Therefore, it will pay the Government to encourage the sale of such records.
I am sure that over the next few years there will be a greatly increased demand for gramophone records, tapes and other things for learning languages. My hon. Friend the Member for Worcestershire, South said that he was not very good at languages. I do not think that many of our generation are, because we were taught at school from the book. School children now are taught from records, and young men and women leaving school are encouraged to take part in further education or to buy records and learn languages at home. It is important that they should do so, because we have an increase in foreign travel today. They are going abroad and it is an advantage to them if they can speak foreign languages. Language records should not be caught by a high Purchase Tax rate, which is bound to determine the public's attitude to their purchase and reduce their sales. I hope that the Minister will have another think about this matter.

Miss Harvie Anderson: I was very disappointed by the Minister's reply, because it seems to me that he was working on the assumption that people throughout a great part of the country could obtain access to many things provided by records. I wish to make a plea for the remote parts of the country. There are many places where it is not possible to go to a concert to hear live music, and in such places records are perhaps appreciated most. This applies to a vast range of schools in Scotland which are far beyond any possible means of communication with a centre that will provide the live interest that we should all like.
The Minister made a very definite point about the difficulty of identification, which has been emphasised by many other hon. Members. But there should be no great need for close identification. If he lived in a very remote area in Wales, Cornwall or the North of Scotland and had never been to a concert, would he think it very unreasonable to expect a village school to put on a concert of records, and that those records should be bought for educational purposes? Would

it be so very shameful if some of the great music of this land and other lands were heard for the first time by the whole community rather than just the children at school? Surely this is the purpose of education as we see it today—as the present Government, unfortunately, do not see it, but as the next Government certainly will. Education now embraces the whole community and no longer the very small range of people from the age of five to 15. We are expected to accommodate and provide for all who are prepared to take an intelligent interest in the best things of life, even if those things come to them a little late.
So the question of identification should not be too closely followed and certainly should not be used as a Treasury argument for exempting these records. There must be some point in the fact that if there were exemption for these records it would mean wider sales. So this would be advantageous to the Treasury. I should have thought that a benign Treasury would be able to reduce the Tax and thus allow more sales of the commodity, because in this way it would act in a commercial fashion towards an industry which provides much for the country and a considerable amount of exports. It is constantly put to us by those who make these records that if they had greater encouragement and greater sales they could increase their export potential. Not long ago when Conservative Members were sitting on the Government side we had the strongest representations along these lines from some of our most distinguished musicians.

Mr. James Dempsey: I am interested in the hon. Lady's argument about the need to exempt certain types of record used in Scottish schools. Would she include in her sample, for example, the records used for providing music for country dancing in schools throughout Scotland? Would they be part of the educational element in records that she feels should be exempted?

Miss Harvie Anderson: Certainly. As I understand it, country dancing classes are provided by further education authorities, and, therefore, are subsidised by the State. I see no distinction between subsidising the teaching of classes and the subsidising of music which is used.
The Treasury is very good when it seeks sources from which to extract finance. It is a constant source of wonder to me that it fails so utterly when asked to identify some worthy object to exempt from tax. I urge the Minister to take these considerations most seriously and perhaps belatedly revise what he has said.

Mr. Robert Cooke: I am glad to catch your eye, Mr. Speaker. You will notice that I have moved from the popular to the educational benches in order to make a brief intervention in the debate.
I was disappointed with the Minister's reply to an intervention from me. The only difficulty that he seemed to visualise was that certain satirical records might be purchased by the public at too low a rate of Purchase Tax. That might not be too bad a thing. To help him, I would say that he could easily have got the key to the problem by exempting these records of a large and expensive nature. These on the whole are the ones of an educational nature. I am sure that the Chancellor is worried lest exemptions should apply to the millions of pop records, which must bring in a good deal of revenue to the Exchequer. But this is not our point. We want to help the edu-

cational side. It should be easy to identify records of an expensive nature and those sold in sets.

We should do nothing, surely, to take away from the instruction and enjoyment which school children and other students can get from these records. Most schools are on a fairly tight budget when it comes to educational material, even schools financed by the State—I speak from personal experience, having served on management committees. Private schools, in which I was at one time a teacher, find themselves with little money for this sort of thing. If the budget has been fixed, a tax change means that less educational material will be available to the children.

I know that the Chancellor is not the hard-hearted person that some people might suggest. I notice a pleasant smile spreading across his face. So I sit down in the hope that he and his great Department will use their ingenuity to put this matter right, if not on this occasion, perhaps in the future.

Question put, That the Amendment be made:—

The House divided: Ayes 145, Noes 192.

Division No. 264.]
AYES
[7.46 p.m.


Alison, Michael (Barkston Ash)
Emery, Peter
McAdden, Sir Stephen


Allason, James (Hemel Hempstead)
Errington, Sir Eric
MacArthur, Ian


Astor, John
Eyre, Reginald
Mackenzie, Alasdair (Ross&amp;Crom'ty)


Awdry, Daniel
Farr, John
Maclean, Sir Fitzroy


Baker, W. H. K. (Banff)
Fletcher-Cooke, Charles
Macleod, Rt. Hn. Iain


Balniel, Lord
Fortescue, Tim
McMaster, Stanley


Beamish, Col. Sir Tufton
Gibson-Watt, David
Maddan, Martin


Bennett, Dr. Reginald (Cos. &amp; Fhm)
Gilmour, Ian (Norfolk, C.)
Maude, Angus


Biggs-Davison, John
Glover, Sir Douglas
Maxwell-Hyslop, R. J.


Black, Sir Cyril
Godber, Rt. Hn. J. B.
Mills, Peter (Torrington)


Blaker, Peter
Goodhart, Philip
Mills, Stratton (Belfast, N.)


Bossom, Sir Clive
Coodhew, Victor
Miscampbell, Norman


Braine, Bernard
Gower, Raymond
Monro, Hector


Brewis, John
Grant, Anthony
Montgomery, Fergus


Brown, Sir Edward (Bath)
Gurden, Harold
More, Jasper


Bruce-Cardyne, J.
Hall, John (Wycombe)
Morgan, Geraint (Denbigh)


Bryan, Paul
Harrison, Col. Sir Harwood (Eye)
Mott-Radclyffe, Sir Charles


Buchanan-Smith, Alick (Angus,N&amp;M)
Harvie Anderson, Miss
Murton, Oscar


Buck, Antony (Colchester)
Hawkins, Paul
Nabarro, Sir Gerald


Campbell, B. (Oldham, W.)
Heald, Rt. Hn. Sir Lionel
Onslow, Cranley


Campbell, Gordon (Moray &amp; Nairn)
Heath, Rt. Hn. Edward
Osborn, John (Hallam)


Carr, Rt. Hn. Robert
Higgins, Terence L.
Osborne, Sir Cyril (Louth)


Channon, H. P. G.
Hill, J. E. B.
Page, Graham (Crosby)


Chichester-Clark, R.
Holland, Philip
Page, John (Harrow, W.)


Clegg, Walter
Hooson, Emlyn
Pearson, Sir Frank (Clitheroe)


Cooke, Robert
Hordern, Peter
Peel, John


Costain, A. P.
Hornby, Richard
Percival, Ian


Craddock, Sir Beresford (Spelthorne)
Hunt, John
Pike, Miss Mervyn


Crowder, F. P.
Iremonger, T. L.
Pounder, Rafton


Cunningham, Sir Knox
Jenkin, Patrick (Woodford)
Powell, Rt. Hn. J. Enoch


Dance, James
Kirk, Peter
Prior, J. M. L.


Davidson, James (Aberdeenshire,W.)
Lane, David
Pym, Francis


d'Avigdor-Goldsmid, Sir Henry
Langford-Holt, Sir John
Ramsden, Rt. Hn. James


Dean, Paul (Somerset, N.)
Legge-Bourke, Sir Harry
Rees-Davies, W. R.


Dodds-Parker, Douglas
Lewis, Kenneth (Rutland)
Rhys Williams, Sir Brandon


Eden, Sir John
Loveys, W. H.
Rossi, Hugh (Hornsey)


Elliot, Capt. Walter (Carshalton)
Lubbock, Eric
Russell, Sir Ronald




Scott, Nicholas
Thatcher, Mrs. Margaret
Williams, Donald (Dudley)


Scott-Hopkins, James
Thorpe, Rt. Hn. Jeremy
Wills, Sir Gerald (Bridgwater)


Sharples, Richard
Turton, Rt. Hn. R. H.
Wilson, Geoffrey (Truro)


Shaw, Michael (Sc'b'gh &amp; Whitby)
van Straubenzee, W. R.
Winstanley, Dr. M. P.


Silvester, Frederick
Vaughan-Morgan, Rt. Hn. Sir John
Wolrige-Gordon, Patrick


Sinclair, Sir George
Wadding ton, D.
Woodnutt, Mark


Smith, Dudley (W'wick &amp; L'mington)
Wainwright, Richard (Colne Valley)
Wylie, N. R.


Smith, John (London &amp; W'minster)
Walker, Peter (Worcester)
Younger, Hn. George


Stainton, Keith
Walker-Smith, Rt. Hn. Sir Derek



Summers, Sir Spencer
Ward, Dame Irene
TELLERS FOR THE AYES:


Tapsell, Peter
Weatherill, Bernard
Mr. R. W. Elliott and


Taylor, Sir Charles (Eastbourne)
Wells, John (Maidstone)
Mr. Timothy Kitson.


Temple, John M.
Whitelaw, Rt. Hn. William





NOES


Alldritt, Walter
Griffiths, Will (Exchange)
Norwood, Christopher


Allen, Scholefield
Hamilton, James (Bothwell)
Oakes, Gordon


Archer, Peter
Hamilton, William (Fife, W.)
Ogden, Eric


Atkins, Ronald (Preston, N.)
Hamling, William
O'Malley, Brian


Atkinson, Norman (Tottenham)
Hannan, William
Orme, Stanley


Bacon, Rt. Hn. Alice
Harper, Joseph
Oswald, Thomas


Barnett, Joel
Harrison, Walter (Wakefield)
Owen, Dr. David (Plymouth, S'tn)


Baxter, William
Haseldine, Norman
Owen, Will (Morpeth)


Beaney, Alan
Heffer, Eric S.
Page, Derek (King's Lynn)


Bence, Cyril
Henig, Stanley
Palmer, Arthur


Benn, Rt. Hn. Anthony Wedgwood
Herbison, Rt. Hn. Margaret
Pannell, Rt. Hn. Charles


Bennett, James (G'gow, Bridgeton)
Hooley, Frank
Parker, John (Dagenham)


Blackburn, F.
Houghton, Rt. Hn. Douglas
Parkyn, Brian (Bedford)


Blenkinsop, Arthur
Howarth, Herry (Wellingborough)
Pavitt, Laurence


Boardman, H. (Leigh)
Howie, W.
Pearson, Arthur (Pontypridd)


Booth, Albert
Hoy, James
Peart, Rt. Hn. Fred


Bottomley, Rt. Hn, Arthur
Hughes, Emrys (Ayrshire, S.)
Pentland, Norman


Braddock, Mrs. E. M.
Hughes, Roy (Newport)
Perry, Ernest G. (Battersea, S.)


Brooks, Edwin
Hunter, Adam
Perry, George H. (Nottingham, S.)


Brown, Hugh D. (G'gow, Provan)
Irvine, Sir Arthur (Edge Hill)
Prentice, Rt. Hn. R. E.


Buchan, Norman
Jackson, Colin (B'h'se &amp; Spenb'gh)
Price, Thomas (Westhoughton)


Buchanan, Richard (G'gow, Sp'burn)
Jenkins, Rt. Hn. Roy (Stechford)
Price, William (Rugby)


Callaghan, Rt. Hn. James
Johnson, James (K'ston-on-Hull, W.)
Probert, Arthur


Cant, R. B.
Jones, Dan (Burnley)
Rankin, John


Carmichael, Neil
Jones,Rt.Hn.SirElwyn(W.Ham,S.)
Rees, Merlyn


Coe, Denis
Jones, J. Idwal (Wrexham)
Richard, Ivor


Coleman, Donald
Kelley, Richard
Robertson, John (Paisley)


Cullen, Mrs. Alice
Kerr, Mrs. Anne (R'ter &amp; Chatham)
Rose, Paul


Dalyell, Tam
Kerr, Russell (Feltham)
Sheldon, Robert


Davidson, Arthur (Accrington)
Lawson, George
Shore, Rt. Hn. Peter (Stepney)


Davies, Ednyfed Hudson (Conway)
Leadbitter, Ted
Short, Mrs. Renée(W'hampton,N.E.)


Davies, Harold (Leek)
Ledger, Ron
Silkin, Rt. Hn. John (Deptford)


Davies, Ifor (Gower)
Lestor, Miss Joan
Silkin, Hn. S. C. (Dulwich)


Dell, Edmund
Lever, Harold (Cheetham)
Slater, Joseph


Dempsey, James
Lewis, Arthur (West Ham, N.)
Small, William


Dewar, Donald
Lewis, Ron (Carlisle)
Snow, Julian


Diamond, Rt. Hn. John
Lomas, Kenneth
Spriggs, Leslie


Doig, Peter
Loughlin, Charles
Steele, Thomas (Dunbartonshire, W.)


Dunn, James A.
Lyons, Edward (Bradford, E.)
Swingler, Stephen


Dunwoody, Mrs. Gwyneth (Exeter)
Mabon, Dr. J. Dickson
Symonds, J. B.


Dunwoody, Dr. John (F'th &amp; C'b'e)
McBride, Neil
Taverne, Dick


Edwards, Robert (Bilston)
McCann, John
Thomson, Rt. Hn. George


Edwards, William (Merioneth)
MacColl, James
Thornton, Ernest


Ellis, John
Macdonald, A. H.
Tinn, James


English, Michael
McGuire, Michael
Tuck, Raphael


Evans, Ioan L. (Birm'h'm, Yardley)
Mackenzie, Gregor (Rutherglen)
Urwin, T. W.


Faulds, Andrew
Mackintosh, John P.
Varley, Eric G.


Fernyhough, E.
Maclennan, Robert
Walker, Harold (Doncaster)


Fitch, Alan (Wigan)
McNamara, J. Kevin
Wallace, George


Fletcher, Raymond (Ilkeston)
Mahon, Peter (Preston, S.)
Watkins, David (Consett)


Fletcher, Ted (Darlington)
Mahon, Simon (Bootle)
Watkins, Tudor (Brecon &amp; Radnor)


Foley, Maurice
Mallalieu, E. L. (Brigg)
Wellbeloved, James


Foot, Michael (Ebbw Vale)
Manuel, Archie
Whitaker, Ben


Ford, Ben
Marquand, David
Whitlock, William


Forrester, John
Mason, Rt. Hn. Roy
Wilkins, W. A.


Fowler, Gerry
Mellish, Rt Hn. Robert
Williams, Alan (Swansea, W.)


Fraser, John (Norwood)
Millan, Bruce
William, Alan Lee (Hornchurch)


Freeson, Reginald
Miller, Dr. M. S.
Williams, Mrs. Shirley (Hitchin)


Galpern, Sir Myer
Milne, Edward (Blyth)
Williams, W. T. (Warrington)


Gardner, Tony
Moonman, Eric
Winnick, David


Gray, Dr. Hugh (Yarmouth)
Morgan, Elystan (Cardiganshire)
Woof, Robert


Greenwood, Rt. Hn. Anthony
Morris, Alfred (Wythenshawe)
Yates, Victor


Gregory, Arnold
Neal, Harold



Griffiths, Eddie (Brightside)
Newens, Stan
TELLERS FOR THE NOES:


Griffiths, Rt. Hn. James (Llanelly)
Noel-Baker,Rt.Hn.Philip(Derby,S.)
Mr. Harry Gourlay and




Mr. Ernest Armstrong.

Clause 14

ALTERATIONS IN PERSONAL RELIEFS

Amendment proposed: No. 270, in page 9, line 24, at end insert:—
(2A) A man who becomes married during a year of assessment may by notice in writing to the inspector elect that his marriage be disregarded for the purposes of any claim for that year under section 214 or 215 of the Income Tax Act, 1952 or section 17 of the Finance Act, 1960 (housekeeper etc. relief), and, in that case, the marriage shall also be disregarded for the purposes of any claim for that year under section 10 of the said Act of 1952 (married and single relief).—[Mr. Harold Lever.]

Mr. Deputy Speaker: With this Amendment it will be convenient to discuss Amendment No. 268, standing in the name of the hon. and learned Member for Darwen (Mr. Fletcher-Cooke) and the names of other hon. Members, in page 9, line 24, at end insert:
(3) Where a man to whom subsection (2) hereof applies satisfies the conditions set out in section 214(1) of the Income Tax Act, 1952, as regards part of the year in which his marriage takes place, he shall be entitled to relief under the said section as if the sum specified in subsection (1) thereof were reduced by one-twelfth for each month of the year ending after the date of the marriage.
(4) For the year 1968–69 and subsequent years section 214 of the Income Tax Act, 1952 shall be amended by substituting for the reference to £75 a reference to £120.

Mr. J. E. B. Hill: I am sorry that the Financial Secretary has not explained the purpose of Amendment No. 270, but I apprehend that it was put down to meet a point I had raised with the Chancellor of the Exchequer in correspondence. It seemed that Clause 14(2) in its present form was about to create an anomaly— indeed, an injustice—which arose from the fact that the Treasury had overlooked the case of a widower with a housekeeper allowance marrying and having his allowances apportioned by the operation of Clause 14(2)
It was decided in the courts some time ago that a taxpayer cannot claim a housekeeper allowance and a married allowance in the same tax year—the allowances are mutually exclusive. Before this year it was no great hardship for a widower remarrying in a tax year to forgo the housekeeper allowance of £75 in favour of the married allowance of £120,

but the Clause as it stands would reduce the married allowance to a widower remarrying in the latter part of the year and at the same time deprive him of his housekeeper allowance. Therefore, if he married in the last six months of the year he would be worse off.
The Chancellor has sought to meet this point by Amendment No. 270, and in so far as he fills the gap I am grateful. But he has filled it in the meanest possible way. He is saying that the taxpayer would have the option in his year of remarriage of sticking to his housekeeper allowance of £75 and having no part of the married allowance. I think that I am right in saying that it would pay the taxpayer to opt for his housekeeper allowance if he married in the last seven months of the year but that in the first five months of the year he should abandon the housekeeper and stick to the apportioned wife's allowance. It may take a bereaved or remarrying accountant to appreciate the niceties of the allowances, but an anomaly has been created and Amendment No. 268 would meet the difficulty in a manner both more logical and more generous.
The first part of Amendment No. 268 says that if we are to apportion at all then we should apportion both allowances and—for that part of the year when the widower has a housekeeper he should have months allowed at the rate of £75 a year and in the subsequent months after marriage at the rate of the married allowance, £120 a year.
8.0 p.m.
We go further. In the second part of our Amendment we suggest that the housekeeper allowance should be raised from £75 to £120. We say that because it is common experience that it is more expensive to find and pay for a housekeeper if one is a widower with young children than for a wife. It is a fact of economic life that housekeepers are dearer than wives. I therefore hope that the Chancellor will accept our point of view, because it has the merit not only of being generous, which may not particularly commend itself to the Treasury, but of restoring the position of 1920, when the allowance for the housekeeper was the same as that for a wife, although admittedly at a rather different level from that now obtaining.
I should like to know how much it would cast to be generous. A balancing item would be that there would be some administrative saving, because the remarrying widower with a housekeeper allowance would not need to have an apportionment if the allowances were the same.

Miss Harvie Anderson: I should like to support my hon. Friend the Member for Norfolk, South (Mr. J. E. B. Hill) and say how glad I am that the Government have put right this anomaly to some extent. At the same time, I emphasise that I am sorry that they did not see fit to go as far as our Amendment suggests, because this seems to me a rather mean response to a very deserving case. While I am grateful for small mercies, I am not satisfied that they could lot have been a little more generous.
This is a sore subject for many people, because, while Amendment No. 270 makes a small concession, there is a far wider range of consideration which would be out of order on this Amendment. Many categories of people for whom there is no housekeeper allowance are as badly in need of such an allowance as the category with which we are dealing. I should like to take the opportunity to tell Treasury Ministers that they continue to convey the impression that homes run themselves.
These two Amendments are concerned with the ability of people to run their homes. A series of disasters might occur which would put any home absolutely out of action overnight. The fundamental consideration with which both Amendments deal, and the much wider range of interests beyond, is whether it is to be made possible for a home to continue as such. That is why I criticise the limitations of the concessions, because when it becomes impossible to maintain a home the burden which falls on the Treasury is often greatly in excess of any tax concession which has been seriously considered by any Government.
We women who run our homes wish that we could get across to Treasury Ministers, successive Treasury Ministers, the fact that we do quite a job and that those of us who are standing here when

we should be cooking dinner have someone else to cook the dinner. This may be an opportune moment to remind hon. Members of that. If that single point can be got across to Treasury Ministers, a whole range of married women's tax concessions will be changed very quickly.
I am glad that some thought has been given to the position of a very small category of people who find themselves dependent on a housekeeper or on a wife, but, while I welcome the improvement which the Government Amendment brings about, I commend to the attention of the Government the vast range of tax improvement and reform needed in this whole respect.

Mr. Michael Shaw: I support Amendment No. 268. Obviously, we must be grateful to the Chancellor for his Amendment, but I fully concur that it does not go far enough. What is astonishing is that we have this flash of logic from the Treasury Bench about how illogical it is that a marriage allowance is given for a whole year, although the recipient may be married for only a month or two in that year, and about how, in this day and age, it is time to put that right.
But, that having been put right, a series of anomalies arises from having put it right. To correct those anomalies, the Government do not take the logical step, but proceed to work on what might be called the good old time-honoured system of taking what is administratively the most convenient way out, and that is exactly what has happened in this instance.
If it is argued, as it was argued in Committee and at other times, that subsection (2) makes the law of marriage allowance more logical, if it is found that the alteration affects other allowances, those allowances should be altered in exactly the same way and on exactly the same principle as marriage allowance is altered. That has not happened. The newly-married person has to choose whether to claim marriage allowance, or housekeeper allowance, or the allowance for looking after children if he is a widower. The Treasury has accepted that conflict of principle and we have not had any explanation of why the principle adopted in subsection (2) has not been


adopted in the Amendment for the allowances under Sections 214 and 215.
It must be remembered that these allowances are given for a purpose. They are given because it is thought right that they should be given and because they are needed by the people receiving them. If a housekeeper allowance is needed for nine months a year before a person is married, the fact that he gets married at the end of that nine months does not mean that his need for the allowance during that nine months is any way alleviated.
That need remains the same. Having got married at the end of the nine months, he is allowed marriage allowance for three months, presumably because the Treasury thinks it right and because it thinks that he needs that allowance for three months. But he has to meet a need before he is married and a need afterwards. He now has to choose which allowance to have. The only logical answer is clearly that he should have the apppropriate proportion of both allowances for the year in which he gets married.
I suggest that we accept the Government Amendment and that they accept the second part of our Amendment, so that the whole House would be satisfied and, what is more important, justice would be done.

The Financial Secretary to the Treasury (Mr. Harold Lever): I deferred commenting on this Amendment because I thought that the hon. Member for Norfolk, South (Mr. J. E. B. Hill) should have the opportunity not only of explaining it but of criticising it, being grateful where gratitude was appropriate and disappointed where some disappointment was not altogether without possibility of anticipation. We owe the Amendment to the hon. Gentleman's raising this point, originally by letter. He drew attention to an anomaly which had escaped the attention of everyone, and we are grateful to him for enabling us to put it right, although not to his most ebullient satisfaction, this year.
At any rate, we will not get the singularly unattractive situation of a man losing the benefit of his housekeeper allowance later in the year because he gets married. I see the force in some of the arguments that have been made, if one were able

satisfactorily to achieve the meticulous justice which hon. Members seek in this matter. I share their attitude, but unhappily our system of allowances is almost always upon an annual basis. It is true that hon. Members may point out that we changed the bowling, so to speak, by making marriage allowances apportioned. This was a year in which we had to exact a very formidable sum of new taxation from the community.
Given that decision, we looked for the areas where we could most reasonably seek to exact some taxation. One of the most obvious ones was that a man should not get a year's marriage allowance if he had been married for only a day in that year. From this, we got the concept of apportioning the marriage allowance. [Interruption.] I see that the right hon. and learned Member for Hexham (Mr. Rippon) thinks it is—

Mr. Geoffrey Rippon: Outrageous.

Mr. Lever: —outrageous. He thinks that we should pay a year's marriage allowance, even in a difficult year like the present one, to a man who has been married for a day. It seemed to us, and I think most hon. Members will feel the same way, that if one has to exact so much extra taxation, here was a source of many millions which could be tapped, when people were receiving marriage allowances for a full year, although they had been married for only a fraction of part of that year. This seemed reasonable on the face of it, but it gave rise to this anomaly. We tried to put it right as fully as we could without imposing a new set of administrative splittings in annual allowances, and that is why the concession made is not as generous as many hon. Members would like. I am afraid that it has to be accepted for the present, and I would recommend the House to accept this Amendment, which goes a good deal towards meeting what the hon. Gentleman had in mind.
I am not at all without sympathy for the difficulties of people in this situation. I have been put into the position of having to lose—I am not at all disappointed at the consequences—my housekeeper allowance in order to achieve a marriage allowance. I must say that at that time I was at once an immediate gainer because I got the marriage allowance for the whole year.

Dr. Reginald Bennett: Shutting the stable door after the horse has bolted.

Mr. Lever: One horse has bolted. I feel a good deal of sympathy for people in this position. None the less, I must ask the House to accept that, this year at any rate, it would not have been possible to introduce yet another split for the sake of what would be marginal sums of money. I will not go into competitive computations with the hon. Gentleman about at which point of time how much monye would have been involved. I hope that he will accept our gratitude for drawing this anomaly to our attention and that, although disappointed, he will support the Amendment, which represents a real attempt to meet the complaint as reasonably as we can.
As to any other concessions on the housekeeper allowance, I take the points made, as I say, with personal understanding and sympathy of the position. Alas, this is not a year in which the Chancellor is likely to give rein to my normally sympathetic inclinations. I must ask hon. Members to make their appeals in a subsequent year, when we are under no such strict exigencies as we are this year. For these reasons I ask the House to accept the Amendment, which is intended to meet in a broad way, the difficulties raised by the hon. Member. We cannot accept any other concession at the present moment.

Mr. Charles Fletcher-Cooke: I am not sure that the appeals for gratitude which the Financial Secretary has addressed to us have fallen on very receptive ears. These two Amendments went on the Order Paper simultaneously. This in itself is perhaps a coincidence, perhaps not. The Government's Amendment is the barest justice, much meaner than the Amendment in the names of myself and my hon. Friends. The amount of difference in money to the Exchequer, even in what the Financial Secretary calls "this difficult year" must be trivial. I do not know why he cannot accept what my hon. Friend the Member for Norfolk, South (Mr. J. E. B. Hill) put forward in a most reasonable manner.
I cannot believe that there is much money in the difference. It strikes me that this is cheeseparing. On the other

hand, better half a loaf than no bread at all. We ought not to take any more time over this. There was an obvious injustice in the Government's first proposal, and we are grateful at least that they have seen the light, even at this late stage.

Amendment agreed to.

Clause 14

ALTERATIONS IN PERSONAL RELIEFS

8.15 p.m.

Mr. Fletcher-Cooke: I beg to move Amendment No. 239, in page 10, line 26, at end insert:
(6) Any individual, who by virtue of the said subsection (3) suffers a reduction in the said deductions from tax, being an individual who has given an option notice under the provisions of Part II of the Housing Subsidies Act, 1967 (Assistance for House Purchase and Improvement), may rescind that option notice by a notice of his desire so to do (hereafter in this subsection referred to as a 'withdrawal notice') given in writing to the lender at any time before 6th April, 1969 by him or his personal representative, and a withdrawal notice shall have the effect of rescinding the option notice as if that option notice had not been given; to the extent that such option notice may have take effect in connection with subsidy or taxation prior to its rescission, the appropriate financial adjustments shall be made.
This Amendment deals with option mortgages—that famous implementation of the large pledge given by the right hon. Member for Belper (Mr. George Brown) and others in the election campaign. In this implementation a great number of people in very humble circumstances have been led into a trap, quite recently and quite directly, by the Government. In Committee the Financial Secretary, in his charming and engaging way—I do not say that he admitted this, but he expressed buckets of sympathy for them when he said:
Nevertheless, I see that the hon. and learned Member has a point which one would like to meet if it were at all possible. I do not want to show absolute lack of sympathy with the people concerned … simply a question of possibilities of administering the scheme … not without sympathy for the purposes of the hon. and learned Gentleman … I am not committing myself to a belief that some Amendment of the law would be possible."—[OFFICIAL REPORT, Standing Committee A, 15th May, 1968; c. 837.]
From a Treasury Minister, those are encouraging words. We had hoped that


by this stage the Financial Secretary, with the great resources of Government Departments behind him, all racking their brains, might have done something to alleviate what is no less than a scandal. Nothing has happened, not a single chink of light from a Government Amendment. Since the Committee I and a number of hon. Members have received many letters from the deluded people who were taken in by the Government's promises, and who opted for the Government mortgage scheme.
In Committee, I held up the booklet issued by the Ministry of Housing and Local Government which was a guide to the scheme and which said:
Read this booklet. You may gain by it.
It stated—and at that time it was right— that, broadly speaking, if one did not pay the standard rate of Income Tax of 8s. 3d. in the £ on any of one's tax, one would be better off opting for the Government scheme. In other words, one should change one's ordinary commercial mortgage for the Government scheme and one would profit by it; if one were taking out a new mortgage, one should take out the option mortgage rather than an ordinary mortgage if one were not paying the standard rate on any slice of income.
Then there was a warning note in the booklet to the effect that a person should consider whether he would always be paying the same rate of taxation, because his circumstances might change. For example, if he ceased to be entitled to children's allowances, or something of that sort, he might find that his top slice went up into the standard rate, or, alternatively, if he was paying the standard rate and his income was reduced he might go below the standard rate, and he had to take into account the changes in his domestic circumstances and to make up his mind, because he had to opt finally by the end of December, 1967, in the case of an existing mortgage or, in the case of a new mortgage, when he took it out.
But there was no suggestion made to these relatively uninstructed people to whom the booklet was directed that they should also take into account possible changes in the structure of tax. That was never mentioned. They were not put on warning that the Government might, so soon after the introduction of the

option mortgage scheme, change the rules, which is what they have done by Clause 14. They have brought many families into the standard rate of tax in respect of their higher income because they have —I will not use the word "fiddled" because that is an emotive word—rearranged the system of family allowances, for the best of motives, in such a way that many people, previously earning exactly the same amount of money, have, in the current financial year, been brought into the standard rate of Income Tax. As a result, those who opted for the scheme in good faith, bearing in mind the considerations which the Government told them to bear in mind but not those which the Government did not tell them to bear in mind, are now much worse off than if they had never opted for it.
I must refer to the letter which I read in Committee. It is one of many which I have received, but it is still the best. It concerns a man buying a house on a long-term mortgage and supporting a wife and four small children. His total income last year was £1,426 and the total tax which he paid was £12 5s. If things had remained as they were, he would have saved about 15s. a week by going over to the Government's option mortgage scheme; and, of course, he did so. But, having gone over to it, as a result of the rearrangement of children's allowances and the consequent upping of the top slice of his income, far from being 15s. a week better off, he is 10s. a week worse off than if he had paid no attention to the booklet and had not listened to the siren songs of the right hon. Member for Belper or of the Minister of Housing and Local Government, or anybody else. He would have been far better off if he had kept to his ordinary mortgage. Now he is 10s. a week worse off. This represents a swing of 25s. a week, which is very serious for a man in those circumstances.
The first argument put forward by the Financial Secretary is that people have to take tax changes on the chin, and that we cannot expect taxation rearrangements to be tempered to the shorn lamb, because otherwise there is no end to the matter. The second argument is that acceptance of our Amendment, which would mean reopening the option, is administratively impossible, not only for the Government, but for the building societies. I say


nothing on the second point, except that if the Financial Secretary and the Treasury wanted to do something about these people they could always make a compensating tax reduction. It may be impossible to reopen the option, but it is not impossible for the Treasury to say that people who have suffered, whether it be to the extent of 5s., 10s. or 15s. a week, should have a compensating amount deducted from their tax. What is wrong with that in practice or in principle?
As for the quality of retrospection, I would merely say that there are endless philosophical, almost theological, arguments about the degree to which a Government may impose retrospective disadvantage—I put it no higher—upon the subject. But I have never heard of any principe which permits a Government who have tempted and trapped people into this situation so recently as six months beforehand and who have encouraged them to rely on the law as it then stood so to alter the arrangements that they are not merely no better off but positively worse off than if they had closed their ears to these temptations. That is disgraceful.
One can understand people taking, or seeking to take, advantage of the tax law as it stands subsequently finding that they do not obtain that advantage because the Treasury has been sharp and has taken it away. We do not like that, but we understand it. However, when people take advantage of the law as it stands and rearrange their affairs and then find that, as a result of subsequent legislation, they are not merely no better off but positively worse off than if they had relied on the law, that is retrospection with a vengeance and should never be done.
Here it has been done, not to tax evaders and avoiders, but to hundreds of people whose votes were sought and won. It is a scandal, and, by one means or another, if not by the means which we suggest, the Government owe it to their honour to put it right.

8.30 p.m.

Mr. Barnett: I am a little surprised to find that the Financial Secretary is to reply, because I thought that he did not reply to hopeless cases. This seems to me to be an indefensible position which the Government have to defend. I am

unhappy about the working of the option mortgage scheme as it stands. The idea is basically a first-class one, the idea of helping those to buy a house who would not otherwise be able to buy a house and of helping existing mortgage payers at the lowest end of the scale. I hope that nobody here would object to that idea. I should have thought that, in principle, this is something all of us could support.
The Government, however, seem to be frightened of giving the scheme a real chance to work, and I suspect that the Building Societies Association has been persuading the Government almost to play it down, because the publicity of it, and the way it has been started and the way it has been working, are such as to give the impression that the Government have a sort of half-hearted approach to the whole idea of the option mortgage scheme.
The Joint Parliamentary Secretary to the Ministry of Housing and Local Government said on 7th May that about 4 per cent. of the existing borrowers who had to make a decision by 31st December, 1967, changed to option mortgages. So about 4 per cent. had opted for the lower interest rate, but I think that it would be agreed, as has been said by the Minister himself, that it is up to 20 per cent. of mortgage payers who could benefit by the scheme. Because of this rigid limitation they have not been able to benefit. Surely it is shameful that the Government should have adopted this sort of niggardly approach which cuts out so many people from the benefits of the scheme. I find it difficult to understand why the Government have adopted this sort of attitude, the major argument which we have had for it being the administrative difficulties of the building societies in dealing with it. 
I would have hoped that the Government could have gone much further than this Amendment. I would have hoped that they would have made it possible for people who did not do so by 31st December, 1967, to opt in, as well as making it possible for people to opt out as the Amendment would allow, because there are changed circumstances. As has been explained by the hon. and learned Gentleman the Member for Darwen (Mr. Fletcher-Cooke), for the man who exercises his option it is now costing more.
I do not believe that one can argue that this is anything like the same situation as applies in the case of those who evolve complicated tax avoidance schemes, or even not so very complicated tax avoidance schemes, such as buying life assurance policies to save tax. I do not believe that it is anything remotely like it. It cannot be compared in any way with that sort of thing, because here the Government said that the mortgage payer could benefit under the scheme and then the Government changed the circumstances.
In the normal way of things, even with a quite legitimate tax avoidance scheme, the person taking part in it can expect that the circumstances may be changed. Indeed, he is invariably advised—he should be advised, and usually is—that things may change. Even the two-fifths life assurance premium allowance can be changed up or down. All these things can happen in a simpler scheme. Certainly they can happen, and have in the past happened in the more complicated ones.
This, however, is a totally different situation, and the Minister's reason for not allowing a change in opting in as well as opting out because of the administrative considerations seems to me to be wholly insupportable. I do not think that that answer is anything like good enough. As to the way the scheme works at present, it is not quite as the hon. and learned Gentleman said. He said that if a mortgage payer is a standard rate taxpayer he has nothing to gain. That is not strictly true, because if he is paying at 6s. and a little at the standard rate he could still benefit from the mortgage option scheme. The question whether he should opt in is often a very fine calculation. The sort of person we are talking about does not have advice; he does not get advice from an accountant; he has probably nobody to advise him. Even if he has someone to advise him, circumstances change so much as to make his decision one of very fine calculation. He may be near retiring age and, though he is now paying tax at the standard rate, in a few years' time he will not be paying at the standard rate; he may have a child aged 13 who, in a couple of years' time, will leave school, and though he is not now paying at the standard rate he will be then. There is an

infinite variety of circumstances in which people decide whether or not to opt in.
Of course, the Government have made it that much more difficult by Clause 14(3), because of the reduction of the child allowance. It was difficult enough for a person to make the right choice before, but given this Clause the position has been made impossible. It seems to me that the Government are under an obligation, if they do not concede a change in the scheme, to concede (his point. There is a strong case for changing the scheme fundamentally to make it easier for building societies to allow all interest payments as a reduction and not allowable for tax in such a way that the standard rate taxpayer does not gain anything by it, but neither does he lose; that those at the lower rates of tax gain something; and those those paying no tax gain the whole of the reduction in the interest rate.
In other words, something like the family allowance scheme and reduction of tax, taking the two things together, so that the standard rate taxpayer does not gain, the lower paid taxpayer gains a little, and the non-taxpayer gains the whole family allowance. If something like that could be done with a mortgage option scheme, it would make it administratively much simpler and it would not cost a great deal. If it were limited to a mortgage up to a certain level, even for a standard rate taxpayer with a £2,000 mortgage, it would not cost the Government very much if they made the situation such that that standard rate taxpayer did not gain anything but neither did he lose. I should like to see the whole scheme changed more extensively to make it not only simpler for administration, but to help a much wider range of people.
It is a great shame that, of the 20 per cent. of people who could benefit, only 4 per cent. do. There must be something wrong with the scheme if it is so complicated that the person we want to see benefit cannot clearly see that he is able to benefit. A much simpler scheme along the lines that I have suggested might cost something more, but we could start off by limiting the level of mortgage to which it would be applicable. It would be simpler to administer and affect many more people at a more moderate cost.
Meanwhile, I feel that the Government are obliged to accept this Amendment because it would at least put right the position for those who accepted the option under the instructions of the Bill and of the booklet issued by the Government. People who made their decision based on that should now have their circumstances changed so that they do not suffer any further.

Mr. Walter Clegg: For once I am pleased to be able to follow the hon. Member for Heywood and Royton (Mr. Barnett) in supporting this Opposition Amendment.
I congratulate my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) on the way in which he clearly put the dilemma which has resulted from this Government option mortgage scheme.
I will refer to the pamphlet, which has been quoted, to show how the choice of people was directed by the Government Department concerned. The pamphlet— and this part is in larger print than the rest—states, on page 4:
But if you qualify for tax relief on your interest at only 6s. or 4s. in the £ or get no tax relief at all, you will normally be better off with in option mortgage and the Government subsidy.
When the pamphlet goes on to discuss what happens if one's circumstances change, that is in small print. Therefore, the Government are faced with people who have acted not only on what they make of the scheme, but who have acted directly on the pamphlet which the Government have issued for their help in reaching a decision.
Possibly one criticism which can be made of the scheme from the beginning is that it: is very complex. As the hon. Member for Heywood and Royton very properly said, the people exercising this mortgage option scheme normally do not go to accountants or even solicitors for advice. I contend that if someone looked at the pamphlet as a whole, and in particular at the tables given in it, his eyes would be drawn—as the pamphlet intends—to the big print which says that if someone is paying tax at below the standard rate, on balance this would be the best thing to do.
I have sent the Financial Secretary a copy of a letter I received from one of my constituents, and perhaps I might quote from it:
Thus, by accepting two socially-intended benefits, not only do I not gain at all, although I have seven children under age 14 and a mortgage of some £2,400—I actually incur a net loss of £3.
That is, of course, a net loss of £3 per month. I can give the hon. Gentleman the figures in that case because they have been worked out by the tax collector.
I cannot imagine that the Government wanted that to happen, but if we put forward cases such as that to Treasury Ministers, or to Ministers in the Ministry of Housing and Local Government, we are inevitably told, not that there is no justice in what we are asking for, but that it is administratively impossible to do it. It is no use telling people that they must suffer injustice because it is administratively impossible to put it right. People do not appreciate that argument.
The writer of the letter went on to say:
I am at present in the extraordinary situation where it would be to my financial advantage to pay £2 a month for the privilege of not receiving either benefit.
I cannot conceive that even this Government want that state of affairs to exist, and I hope that the hon. Gentleman will take careful note of the arguments put forward today. I am sure that he will.
It is very difficult for the change to be made vis-à-vis the building societies, to reopen the option mortgage scheme, but the suggestion put forward by the writer of the letter is that if the family allowance itself were not reduced as it is in the Act by £36, at the standard rate, it should be deducted at the higher rate paid by the taxpayer before the new allowance came in. I do not know whether that would meet the situation, but perhaps the Minister will comment on it.
The Financial Secretary comes from a part of the world in which many people who are buying houses qualify under the scheme. I am thinking of mill workers, factory workers, and so on, who buy houses worth between £800 and £2,500. They accepted the Government's word


as given in the pamphlet, and although they were warned that their circumstances might change, this was not the sort of change envisaged when they opted for the mortgage. I hope that the Minister will give us what we are asking for.

Mr. G. Campbell: I, too, support my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) who has so lucidly explained the injustice which could be done to certain people who have taken decisions under the Housing Subsidies Act, 1967. Under that Act a prospective house purchaser was given a choice. He could decide to take the option mortgage and pay a special rate subsidised by the Government, or he could continue to have a normal mortgage, and, if he paid a considerable amount of tax, get relief on that. His decision depended on the amount of tax for which he was likely to be liable in future years.
As the hon. Member for Heywood and Royton (Mr. Barnett) said, this was never an easy decision. I was a member of the Committee which considered the Housing Subsidies Bill, and I then used much the same words as those used by the hon. Member for Heywood and Royton today. If he looks up the OFFICIAL REPORT of the Committee he will see that on several occasions I referred to the difficult decisions which had to be taken under the Act. There were different circumstances for different members of the public. Prospective house purchasers had, somehow, not only to foresee their own likely rate of income in the future but also the liability to taxation of that income, and whether or not there would be any significant raising or lowering of taxes. This was very difficult for them.
8.45 p.m.
Now, within a year of that Measure becoming law—in May last year—the Government have put forward a proposal which completely changes the liability to Income Tax of many persons who had to decide whether or not to take part in the opition mortgage scheme. This change will have upset the simplest calculations of a person who gave an option notice before the end of last year, and it is reasonable that he should now be given an opportunity to rescind that decision.
I realise that the Government will say that they cannot go on for ever allowing those who have taken decisions under the option mortgage scheme to change their minds. I will understand it if the Minister puts forward that argument tonight. But this is a very special situation, because up to December, 1967, people who already had mortgages were given the opportunity to take such a decision. They were given a deadline. Many of those who opted for the scheme find themselves in completely changed circumstances, and some may be considerably worse off. In this situation the Government can take special action this year without committing themselves to having to make other changes later just because there is another change in taxation.
I can understand the Government's saying that this is not deliberate. I agree that it is not their intention to mislead prospective house purchasers, but many people have been misled and let down by the Government. They have taken a very important decision, and the circumstances have now been radically altered.
I was not in the Committee which dealt with the 1967 Act and I am therefore glad to be able to speak on Report on this Finance Bill. I am glad that the Guillotine has not yet come down. I understand that in Committee the Government said that it was administratively too difficult to make this change but, as my hon. and learned Friend the Member for Darwen said, some recompense can be made by the Government to the people who have been caught by their actions.
The Government know that in Committee and in the House last year we supported the concept of an option mortgage scheme. Like the hon. Member for Heywood and Royton, I was in favour of the idea. My hon. Friends and I assisted the Government by improving the Bill that they produced and attempting to improve it further still. We would have proposed somewhat different provisions in this respect.
We were not altogether happy with their proposed procedure. But we would not have let that Bill become an Act if we had thought that the Government would, in this Finance Bill, make changes in the personal reliefs and thereby alter individual allowances and upset entirely


decisions taken in good faith before the Budget.
I therefore appeal to the Financial Secretary, who is a reasonable man, to see that justice is done in this matter.

Mr. Harold Lever: This has been an interesting and sincere and, even though critical, moderately expressed debate, and I wish that this Amendment had made it possible for me to remain in order and discuss what might have been, in other respects, the best drafting of an option mortgage scheme, and matters of that kind. Unhappily, I am concerned only with the narrower point of what we do about people who opted into the mortgage scheme and who, as a result, find that, instead of gaining as they intended and as, I think hon. Members will accept, we in good faith intended, they lost.
In Committee, I expressed my wish to try to help these people if it were possible to do so. I did not say and I do not concede now, for reasons which I will give, that they were the victims of an injustice. That does not mean that I do not feel real sympathy for them, and, if I readily could, I would have helped them. I spent a good deal of time between Committee and now trying to evolve some means of satisfactorily dealing with the problem, and I have not been able to find any.
It has been said that this is retrospective and unjust. First of all, there is nothing retrospective whatever in this legislation. I thought that a good deal of the discussion on this was away from reality. When people were invited to exercise this option, it was pointed out to them that whether they gained or lost would depend upon their circumstances and that this gain or loss might change as their circumstances changed. The kind of circumstances upon which the gain or loss depends include tax rates, interest rates—[An HON. MEMBER: "It was not said."] It might not have been said, but I am not free to go into that.
If the hon. Gentleman is complaining that the; Minister responsible for the scheme did not sufficiently adumbrate and detail the circumstances of change, that may be another matter which would be very well dealt with by the Minister responsible for issuing the pamphlet. I can say only that we are satisfied that everybody was warned that changed

circumstances would affect his position and people were warned that circumstances could change which would affect their position to a point at which, instead of gaining, they would lose.
I do not think that it would be in order for me to read through every detail of the pamphlet and then invite the House to judge whether I have fairly stated this matter. This is a matter which hon. Members are free to press, perhaps in criticism of the type of scheme, the structure of the scheme, and the like, but I am obliged to tell the House that, although I think that this can be a hardship, the extent of which I will discuss in a moment, and a hardship with which I fully sympathise and which I should like to avoid, the fact remains that people who opted under the scheme opted in the knowledge that their circumstances could change in a way which would make their option unrewarding as opposed to rewarding and that they would suffer actual loss.
Secondly, they were warned that, when they opted, that option would be irrevocable—

Mr. Dempsey: Would my hon. Friend make it clear at what stage these people were warned that a change in circumstances could negative the option which they had expressed?

Mr. Lever: At the stage before they opted for the mortgage scheme. In other words, before they opted they were informed that an option could turn out unfavourably if their circumstances changed.
I am not prepared to turn this into a debate—nor is it possible to do so— in which we examine the whole of the pamphlet put out by the Ministry to see whether the warning was adequate. That is another matter. I gather that the right hon. and learned Member for Hexham (Mr. Rippon) thinks that it is not another matter. I, for my part, will assert that the warning given was a reasonable warning, both as to irrevocability and as to change of circumstances.
None the less, I will not pretend that I do not regret that it has affected, and so soon, people who have opted.

Dr. Bennett: They trusted the Government.

Mr. Lever: It is not a question of trusting the Government. The Government did not enact their tax legislation with a view to nullifying the effect, or. still worse, affecting the situation adversely for these optants.
May I point out to the hon. Member for Moray and Nairn (Mr. G. Campbell) that no one in the Committee claimed, as far as I know, that he foresaw the kind of difficulty which this would bring about, namely, that a change in tax rates could be complained of as a retrospective action under the option mortgage scheme. If one were to say that because a taxation change has this effect on the option mortgage scheme, it is retrospective, because the man is locked in, then one must also make that complaint of any change in allowances or in the standard rate of tax or matters of that kind.
Did the public, did hon. Members who voted for that Act, believe that we were indicating that at no point would we change our standard rate of tax or change our tax allowances for the next 20 or 30 years in such a way as—

Mr. G. Campbell: I made it clear in my statement that we realised that there would be changes in taxation, but that we did not visualise that those who had to take a decision by a deadline last December would find the ground completely cut from beneath their feet by something announced in March.

Mr. Lever: It does not matter whether it was announced in March, 1968, or in March, 1978. Hon. Members have accused the Government of retrospection because the tax rates have been changed to the detriment of someone locked in the option mortgage scheme. Those people knew that they were locking themselves in and they knew that a change in their circumstances might result in that being to their detriment.
If hon. Members say that the situation is unfortunate, I join them. It is unfortunate that somebody so soon should suffer in such a way. But without a misuse of language, hon. Members cannot talk of this as retrospection or as though the Government implied, when they brought in the Bill, that they would never change the tax rates or allowances in such a manner as might affect these people to their detriment. Clearly, that

would have been an impossible commitment for any Government to undertake, and the present Government certainly did not undertake it.
I therefore say sharply—or, rather, I say that we must sharply make a division between sympathy for the people who are affected and that kind of accusation. I rarely speak sharply, and I meant to say that the distinction must be sharp. We must make a sharp division between a claim which merits sympathy for consideration and a claim which commands an imperative right to be corrected by the Government to the extent of legislation being enacted, the Government having retrospectively legislated to the detriment of people in an improper way. I agree with the first part of the claim, but I reject the second part completely.
I must make one or two comments on the problem of dealing with opting out. If options out are allowed on these grounds it is difficult to see how one could draft one's option opting outright so as to limit it to these cases and no others. There must be other cases of people whose circumstances have changed, by a change of interest rates, a change of earnings, a change in the number in the family and matters of that kind, whom we might wish to opt out. We would, therefore, have to allow the opting out this year to the whole class of people concerned, and we would, in addition, have a very dubious ground on which to stand if we did not give the same right to people similarly affected in the second or third year.
It is not possible to single out one person who has been adversely affected and not deal with people who have at least as good if not a stronger claim, and this would be necessary before I could recommend a Clause that did reasonable justice to all the people concerned.
9.0 p.m.
The further problem is that the administration of the scheme is sufficiently difficult as it is, not merely for the Inland Revenue. I could look into the matter to consider whether we could by some heroic exercise yet again try to meet the problem, but I am completely unable to help on the aspect that the scheme depends for its operation on the co-operation of the building societies. The building societies have said in the plainest


terms that they cannot operate the scheme except on the basis of an irrevocable decision taken by the people concerned. I am not, therefore, in a position to give the relief in a form that would enable opting out to take place, since I cannot commit the building societies, and I have every reason to believe that it will be impossible to get them to change their view upon the matter. Therefore, I could not do what is asked in the Amendment or what was asked in Committee.
Hon. Members have quoted cases of the significant changes that have occurred. The hon. and learned Member for Darwen (Mr. Fletcher-Cooke) mentioned a case in which he calculates that a man, instead of being 15s. a week better off, will be 10s. a week worse off. I have applied the skilled computers of the Inland Revenue to the facts so far as they have been revealed, and, on any reasonable assumption that we can make about the facts which were not revealed, we worked out that the man in question, however genuine in his conviction, has in fact moved from a position of 5s. to 6s. a week gain to a loss of about 1s. a week.
I want hon. Members to keep this in proportion. I do not say that 1s. a week must be ridiculed. For example, it may mean that the loss is coupled with the disappointment of losing the gain that had been expected. I do not think that it will be easy for the hon. and learned Gentleman to find cases where there are losses of either £3 a month or even of the 10s. a week that he has mentioned.

Mr. Fletcher-Cooke: I am surprised that at this late hour the details which I gave in Committee three or four weeks ago, and which I repeated tonight, have only now been challenged. I should have thought, either when we were upstairs, or a day or so later, the Financial Secretary might have written to me asking for further details of the case, and, if he challenged it, letting me know how he challenged it.

Mr. Lever: In Committee, we did not give this computation to the Committee. It has been alleged that there are cases of a loss of as much as £3 a month. I should be very interested to have details from the hon. and learned Gentleman, not at this moment but at some convenient time. I will certainly have it

looked into. Hon. Members have now put forward the suggestion that we ought to look at the other possibilities of dealing with the matter.

Mr. Cranley Onslow: The Financial Secretary may recall that I sent particulars to him of a loss which was about £2 a month, if not more. I am sorry to say that I have not yet had any full reply. The delays that have occurred in answering correspondence on this point have been disappointing.

Mr. Lever: I am sorry if the hon. Gentleman has not had a prompt reply. I deeply regret it. There is a pressure of work upon the Department at this season which is the only mitigating plea that I can make. I do not say that that excuses it. I very much apologise to the hon. Member for any delay, and I shall have the matter looked into immediately.

Mr. Barnett: On 7th May the Parliamentary Secretary to the Ministry of Housing and Local Government said that while he could not allow opting in or out after 31st December, 1967, he was looking at cases of special hardship. Is the Financial Secretary now saying that it is possible to look at cases of special hardship that might arise out of this or any other matter?

Mr. Lever: I was going on to say that the discussions which we have had today, coupled with the fact that I have never disguised my sympathy with those who are affected, make me feel that this matter ought to be looked at very carefully, not necessarily from the Revenue angle, which was the rather narrow approach we had here, but in more general terms, to see what is the extent of the difficulty and what are the possibilities other than a mere opting in and out for revenue purposes, which is impossible administratively both for the Revenue and for the building societies.
I think that hon. Members have made a very considerable case which should be looked at to see what considerations can be given to people affected in this way. I am particularly grateful to my hon. Friend the Member for Heywood and Royton (Mr. Barnett), who sits in the seat that I used to occupy with some satisfaction in previous years, and I am


glad that he brings the same dispassionate objectivity to bear on these matters.
I am not retreating behind the narrow plea of the Revenue. There is a case to be looked at. But, within the framework of our discussions in Committee and again today, I cannot help. That does not mean that that sheds the whole Government obligation. My hon. Friend the Parliamentary Secretary to the Ministry of Housing and Local Government pledged himself to look into it, and that pledge ought to be followed up. I will add my words in support of the comments made today that the matter should be given the most urgent examination. All that I regret is that, within the framework of the Amendment and the administration of tax, I cannot put this difficulty to rights.
I hope that hon. Members will not think that I have failed in my duty which was, after the Committee stage, to see what could be done within this framework to solve the problem. On the other hand, I am unable to help, but that does not mean that the matter must not be looked at urgently elsewhere.

Mr. Rippon: None of the people who who have been so seriously misled by the Government will be impressed by the crocodile tears that the Financial Secretary has shed. I thought that it was a thoroughly hypocritical and unsatisfactory reply—

Mr. Harold Lever: The right hon. and learned Gentleman apparently likes to indulge in polysyllabic adjectives. Does he mean that I was insincere in my assertions of sympathy, or does he consider that some other meaning should be attached to it?

Mr. Rippon: I thought that my words were clear and censorious in their tone, and deliberately so. I cannot understand how the Financial Secretary can challenge the facts laid before his Department by many hon. Members on both sides of the House not only in correspondence but in Committee and in Parliamentary Questions put to the responsible Ministers in the Ministry of Housing and Local Government. It is not good enough to say, "We are very sympathetic. We think there is a case which ought to be looked into." It should have been looked into by now.
The Financial Secretary began by saying that he had real sympathy for people who have suffered hardship as a result of the decision that they have taken in the light of guidance which they received from the Government. He said that they had been unfortunate. But who other than the Government can put that right? He has conceded already that something has gone seriously wrong, but then he says, "There is nothing that we can do about it".

Mr. Harold Lever: I did not say that there is nothing that we can do about it. I said that there is nothing that we can do about it within the framework of the Amendment.

Mr. Rippon: The Government have all the resources to frame an Amendment in a form which remedies an injustice, even if it means making an ex gratia payment to those who have suffered as a result of their action. It is not good enough for the hon. Gentleman to say that the document which misled the public was the responsibility of the Minister of Housing and Local Government. It is the Government's collective responsibility, and the Treasury shares it as much as anybody else. The Government were aware of the document that was sent out and of the guidance given to people that those paying less than £80 per annum in tax were likely to benefit from an option mortgage. Many of them have been misled and as a result have suffered financially. Surely the Government can do something about such cases?
In our discussions on the Housing Subsidies Act we on this side of the House pressed unsuccessfully for a second option to be permitted to mortgagors. That is a matter which perhaps raises considerations for wider amendment of the Act in due course. We pointed out the inflexibility of the Government's provisions and warned of the dangers that might arise. We were then discussing the difficulty that faced a man entering into a mortgage in making the decision, perhaps very early in his life, as to whether or not he was likely to go on paying, say, 6s. in £, for a very long period or was likely to improve his prospects. It was understood that people would have to make the decision in the light of their assessment of their circumstances, such as


whether they were in the sort of occupation that had reasonable prospects of promotion and advancement.
For the person buying a house under an existing mortgage, it was rather easier to make the decision whether he was likely to benefit by the new provisions. That is why a higher proportion of existing mortgagors have exercised the option as compared with new mortgagors.
In the light of what the Minister said today, the Government should warn people in pretty strong terms that they should take advice from sources other than the pamphlet before they exercise an option. Last month's building society magazine, Building Society Affairs, illustrated some of the difficulties now arising under the Act. As it says,
The Scheme was devised at a time when most societies were charging 7⅛ per cent. to borrowers but now that the mortgage rate has risen to 7⅝ cent., tax reliefs have increased whereas the subsidy has remained static so that the advantage of opting has diminished…. It is now particularly difficult for a person in the 6s. tax band to make up his mind whether or not to opt because, for every £1,000 borrowed, he will, at the end of 25 years, be only £85 better off through opting. After 10 years (the average life of a mortgage) the advantage, taking into account the balance of debt outstanding, would be only £32 for every £1,000 borrowed.
That is part of the general anxiety which arises at present to which the hon. Gentleman referred. It is a disappointing scheme, and it is not fulfilling in any way the expectations of those who promoted it or those on this side of the House who supported it, believing that it would bring some benefit to those in the lower income ranges.
We are not really seeking, however, to raise tonight the general issue as to

whether or not in ordinary circumstances a man should exercise the option. We accept that people must make a judgment as to whether their conditions will change or whether the standard rate may change, because one assumes that as the standard rate changed so the whole range of reliefs would be spread generally over the whole community. The effect on the option of the subsection about family allowances is in a sense a comparatively minor adjustment which nobody might have foreseen. It is because it is a limited point, and because the hardship can be so clearly identified, that we think that the Government should do their duty and compensate those who have been misled.

9.15 p.m.

At the very least we ought to have an undertaking in much firmer terms than we have had so far that this extremely misleading document sent out in the Government's name—"Your guide to the option mortgage scheme"—will be amended and reissued. Also, the Government, who spent a good deal of money on an advertising campaign telling people of the advantages of joining the option mortgage scheme, should now issue a further series of advertisements explaining how they have falsified the hopes on which so many people were induced to act, and in those advertisements they ought to state the steps which they are taking to enable those who have suffered hardship as a direct result of the Government's action to be compensated.

Question put, That the Amendment be made:—

The House divided: Ayes 139, Noes 194.

Division No. 265.]
AYES
[9.16 p.m.


Allson, Michael (Barkston Ash)
Campbell, B. (Oldham, W.)
Farr, John


Allason, James (Hemel Hempstead)
Campbell, Gordon (Moray &amp; Nairn)
Fletcher-Cooke, Charles


Astor, John
Carr, Rt. Hn. Robert
Fortescue, Tim


Awdry, Daniel
Chichester-Clark, R.
Gibson-Watt, David


Baker, W. H. K. (Banff)
Clegg, Walter
Gilmour, Ian (Norfolk, C.)


Balniel, Lord
Cooke, Robert
Glover, Sir Douglas


Beamish, Col. Sir Tufton
Craddock, Sir Beresford (Spelthorne)
Godber, Rt. Hn. J. B.


Bennett, Dr. Reginald (Gos. &amp; Fhm)
Crowder, F. P.
Goodhart, Philip


Biggs-Davison, John
Cunningham, Sir Knox
Goodhew, Victor


Black, Sir Cyril
Dance, James
Gower, Raymond


Blaker, Peter
Davidson, James (Aberdeenshire,W.)
Gurden, Harold


Bossom, Sir Clive
d'Avigdor-Goldsmid, Sir Henry
Hall, John (Wycombe)


Braine, Bernard
Dean, Paul (Somerset, N.)
Harrison, Col. Sir Harwood (Eye)


Brewis, John
Dodds-Parker, Douglas
Harvie Anderson, Miss


Brown, Sir Edward (Bath)
Eden, Sir John
Hawkins, Paul


Bruce-Gardyne, J.
Elliott, R. W. (N'c'tle-upon-Tyne, N.)
Heald, Rt. Hn. Sir Lionel


Bryan, Paul
Emery, Peter
Heath, Rt. Hn. Edward


Buchanan-Smith, Alick (Angus,N&amp;M)
Errington, Sir Eric
Higgins, Terence L.


Buck, Antony (Colchester)
Eyre, Reginald
Hill, J. E. B.




Hooson, Emlyn
Onslow, Cranley
Taylor, Sir Charles (Eastbourne)


Hordern, Peter
Osborn, John (Hallam)
Taylor, Frank (Moss Side)


Hornby, Richard
Osborne, Sir Cyril (Louth)
Temple, John M.


Hunt, John
Page, Graham (Crosby)
Thatcher, Mrs. Margaret


Iremonger, T. L.
Page, John (Harrow, W.)
Turton, Rt. Hn. R. H.


Jenkin, Patrick (Woodford)
Pardoe, John
van Straubenzee, W R.


Kirk, Peter
Pearson, Sir Frank (Clitheroe)
Vaughan-Morgan, Rt. Hn. Sir John


Kitson, Timothy
Peel, John
Waddington, D.


Lane, David
Percival, lan
Wainwright, Richard (Colne Valley)


Langford-Holt, Sir John
Pounder, Rafton
Walker, Peter (Worcester)


Legge-Bourke, Sir Harry
Powell, Rt. Hn. J. Enoch
Walker-Smith, Rt. Hn. Sir Derek


Lewis, Kenneth (Rutland)
Prior, J. M. L.
Ward, Dame Irene


Lubbock, Eric
Pym, Francis
Weatherill, Bernard


MacArthur, lan
Ramsden, Rt. Hn. James
Wells, John (Maidstone)


Mackenzie, Alasdair (Ross &amp; Crom'ty)
Rees-Davies, W. R.
Whitelaw, Rt. Hn. William


Macleod, Rt. Hn. lain
Rhys Williams, Sir Brandon
Williams, Donald (Dudley)


McMaster, Stanley
Rossi, Hugh (Hornsey)
Wills, Sir Gerald (Bridgwater)


Maddan, Martin
Russell, Sir Ronald
Wilson, Geoffrey (Truro)


Maginnis, John E.
Scott, Nicholas
Winstanley, Dr. M. P.


Maude, Angus
Scott-Hopkins, James
Wolrige-Gordon, Patrick


Mawby, Ray
Sharples, Richard
Wood, Rt. Hn. Richard


Maxwell-Hyslop, R. J.
Shaw, Michael (Sc'b'gh &amp; Whitby)
Woodnutt, Mark


Mills, Peter (Torrington)
Silvester, Frederick
Wylie, N. R.


Miscampbell, Norman
Sinclair, Sir George
Younger, Hn. George


More, Jasper
Smith, Dudley (W'wick &amp; L'mington)



Mott-Radclyffe, Sir Charles
Smith, John (London &amp; W'minster)
TELLERS FOR THE AYES:


Murton, Oscar
Stainton, Keith
Mr. Anthony Grant and


Nabarro, Sir Gerald
Summers, Sir Spencer
Mr. Hector Monro.


Nott, John
Tapsell, Peter





NOES


Albu, Austen
Fitch, Alan (Wigan)
Lomas, Kenneth


Alldritt, Walter
Fletcher, Raymond (llkeston)
Loughlin, Charles


Allen, Scholefield
Fletcher, Ted (Darlington)
Lyons, Edward (Bradford, E.)


Archer, Peter
Foley, Maurice
Mabon, Dr. J. Dickson


Atkins, Ronald (Preston, N.)
Foot, Michael (Ebbw Vale)
McBride, Neil


Atkinson, Norman (Tottenham)
Ford, Ben
McCann, John


Baxter, William
Forrester, John
MacColl, James


Beaney, Alan
Fowler, Gerry
Macdonald, A. H.


Bence, Cyril
Fraser, John (Norwood)
McGuire, Michael


Benn, Rt. Hn. Anthony Wedgwood 
Freeson, Reginald
Mackenzie, Gregor (Rutherglen)


Bennett, James (G'gow, Bridgeton)
Galpern, Sir Myer
Mackintosh, John P.


Bishop, E. S.
Gardner, Tony
Maclennan, Robert


Blackburn, F.
Ginsburg, David
McNamara, J. Kevin


Blenkinsop, Arthur
Gourlay, Harry
Mahon, Peter (Preston, S.)


Boardman, H. (Leigh)
Gray, Dr. Hugh (Yarmouth)
Mahon, Simon (Bootle)


Booth, Albert
Greenwood, Rt. Hn. Anthony
Mallalieu, E. L. (Brigg)


Bottomley, Rt. Hn. Arthur
Gregory, Arnold
Manuel, Archie


Braddock, Mrs. E. M.
Griffiths, Eddie (Brightside)
Marks, Kenneth


Bradley, Tom
Griffiths, Will (Exchange)
Marquand, David


Brooks, Edwin
Hamilton, James (Bothwell)
Mason, Rt. Hn. Roy


Brown, Hugh D. (G'gow, Provan)
Hamilton, William (Fife, W.)
Mellish, Rt. Hn. Robert


Bucnan, Norman
Hamling, William
Mendelson, J.J.


Buchanan, Richard (G'gow, Sp'burn)
Hannan, William
Millan, Bruce


Callaghan, Rt. Hn. James
Harper, Joseph
Miller, Dr. M. S.


Cant, R. B.
Harrison, Walter (Wakefield)
Milne, Edward (Blyth)


Carmichael, Neil
Haseldine, Norman
Moonman, Eric


Coe, Denis
Heffer, Eric S.
Morgan, Elystan (Cardiganshire)


Coleman, Donald
Henig, Stanley
Neal, Harold


Crawshaw, Richard
Herbison, Rt. Hn. Margaret
Newens, Stan


Cullen, Mrs. Alice
Hooley, Frank
Noel-Baker, Rt. Hn. Philip (Derby, S.)


Dalyell, Tam
Horner, John
Oakes, Gordon


Davidson, Arthur (Accrington)
Houghton, Rt. Hn. Douglas
Ogden, Eric


Davies, Ednyfed Hudson (Conway)
Howarth, Harry (Wellingborough)
O'Malley, Brian


Davies, Harold (Leek)
Howie, W.
Orme, Stanley


Davies, lfor (Gower)
Hoy James
Oswald, Thomas


Dell, Edmund 
Huckfield, Leslie
Owen, Dr. David (Plymouth, S'tn)


Dempsey, James
Hughes, Roy (Newport)
Page, Derek (King's Lynn)


Dewar, Donald
Hunter, Adam
Palmer, Arthur


Diamond, Rt. Hn. John
Irvine, Sir Arthur (Edge Hill)
Pannell, Rt. Hn. Charles


Dickens, James
Jackson, Colin (B'h'se &amp; Spenb'gh) 
Parker, John (Dagenham)


Doig, Peter
Jenkins, Rt. Hn. Roy (Stechford)
Parkyn, Brian (Bedford)


Dunn, James A.
Johnson, James (K'ston-on-Hull W.)
Pavitt, Laurence


Dunwoody, Mrs. Gwyneth (Exeter)
Jones, Dan (Burnley)
Pearson, Arthur (Pontypridd)


Dunwoody, Dr. John (F'th &amp; C'b'e)
Jones, Rt. Hn. Sir Elwyn (W.Ham,S.)
Peart, Rt. Hn. Fred


Edwards, Robert (Bilston)
Jones, J. Idwal (Wrexham)
Pentland, Norman


Edwards, William (Merioneth)
Kelley, Richard
Perry, George H. (Nottingham, S.)


Ellis, John
Lawson, George
Prentice, Rt. Hn. R. E.


English, Michael
Ledger, Ron
Price, Thomas (Westhoughton)


Ensor, David
Lestor, Miss Joan
Price, William (Rugby)


Evans, loan L. (Birm'h'm, Yardley)
Lever, Harold (Cheetham)
Probert, Arthur


Faulds, Andrew
Lewis, Arthur (W. Ham, N.)
Rankin, John


Fernyhough, E.
Lewis, Ron
Rees, Merlyn







Richard, Ivor
Steele, Thomas (Dunbartonshire, W.)
Wellbeloved, James


Robertson, John (Paisley)
Swingler, Stephen
Whitaker, Ben


Rodgers, William (Stockton)
Symonds, J. B.
Whitlock, William


Rose, Paul
Taverne, Dick
Wilkins, W. A.


Sheldon, Robert
Thomson, Rt. Hn. George
Williams, Alan Lee (Hornchurch)


Shore, Rt. Hn. Peter (Stepney)
Thornton, Ernest
Williams, Mrs. Shirley (Hitchin)


Short, Mrs. Renée (W'hampton, N.E.)
Tinn, James
Williams, W. T. (Warrington)


Silkin, Rt. Hn. John (Deptford)
Tuck, Raphael
Winnick, David


Silkin, Hn. S.C. (Dulwich)
Urwin, T. W.
Woof, Robert


Silverman, Julius
Varley, Eric G.
Yates, Victor


Slater, Joseph
Walter, Harold (Doncaster)



Small, William
Wallace, George
TELLERS FOR THE NOES:


Snow, Julian
Watkins, David (Consett)
Mr. Ernest Armstrong and


Spriggs, Leslie
Watkins, Tudor (Brecon &amp; Radnor)
Mr. Ernest G. Perry.

Clause 15

AGGREGATION WITH INCOME OF PARENTS OF INVESTMENT, ETC. INCOME OF UNMARRIED INFANTS NOT REGULARLY WORKING

Mr. Diamond: I beg to move Amendment No. 153, in page 10, line 35, leave out from beginning to ' so ' in line 36 and insert:
'Subject to the following provisions of this section, an infant's income'.

Mr. Deputy Speaker (Mr. Sydney Irving): It may be convenient with this Amendment to discuss Government Amendments No. 154, No. 155 and No. 156.

Mr. Diamond: I am grateful to you for that suggestion, Mr. Deputy Speaker, because the four Amendments go together. All told, they achieve two purposes. The first is to implement my undertaking to take out of aggregation a child's income arising from sums awarded for personal injury to the child. The second is to retain in a somewhat generalised form the de minimis exception for a child's income not exceeding £5 arising from parent-child settlements.
Of course I will explain as much detail as the House wishes, but I think that the Amendments broadly speak for themselves. The details of the personal injury exclusion are set out in paragraph (b) of the new subsection (2) and the definition reproduces that of personal injuries inserted in Section 31 of the Limitation Act, 1939, by the appropriate Section of the Law Reform Act, 1954, so that we are relying on words which have precedent and which should be capable of easy interpretation.
We covered this matter fairly fully in Committee. I have explained my understanding of the view of the Opposition, which is that the matter ought to go further, but I have made it clear that,

however sympathetic I am to that point of view, I am totally unable to find a method of further distinguishing income which is to be exempt from aggregation from still further proposals which would immediately be put forward. I have therefore brought forward the proposal which I undertook to introduce and I have recognised that it is limited in the way which I suggested.
The issue of the £5 limit was raised in Committee by the hon. Member for Bournemouth, West (Sir J. Eden), and I made it clear that I thought that it would be very unfortunate if anybody thought that the removal of the £5 exemption meant that the Government no longer regarded savings as being of the same importance as previously, or the need to encourage savings as being as important as previously. We do, and to make it absolutely clear that we do we are re-introducing, in a somewhat generalised form, the £5 exemption. Income within this figure will continue to rank as that of the child for tax purposes, and will not therefore be aggregated. This deals with the first two Amendments. The other two are broadly consequential.

9.30 p.m.

Mr. Iain Macleod: I have two comments to make, which I will relate to Amendment No. 154. I want to express gratitude to the Chief Secretary. In our discussions in Committee this became known as the thalidomide case. The effect of this Amendment, although it is not limited to thalidomide cases, but this was the one most in people's minds, is that the sums awarded in compensation because of injury to the infant shall not be aggregated with that of their parents.
In a sense it has always seemed extraordinary that we had ever to press such an obvious point before the Government conceded it. It would have been disgraceful if such an aggregation had been made. The point has been made, pressed


and recognised, and we are grateful for that. I suppose that it is inevitable that the Treasury had, even in the case of these deprived children, such as a thalidomide babe, to draw this concession so as to make is at small and mean as possible.
For the child compensation directly related to the claim for damages in respect of personal injury to the infant or any disease or impairment to the physical or mental condition is allowed. However, unless I read this wrongly, the Treasury still aggregates with the income of the parents any investment income which might be left to the child by a grandparent or any other relative, or in any other way, whether the thought of compensation was in the grandparents' mind or not. I think that I am right in saying that what is put before us now is strictly limited to the satisfaction of the claim for damages.
I would have thought that, in considering a matter as sensitive as this, the Treasury could have relaxed a little further and said that children who suffered this appalling misfortune should not have any income which may be left to them aggregated as well. I am bound to record that note of disappointment at the narrowness of the Treasury interpretation of the undertaking given upstairs, but the undertaking has been honoured and as far as it goes it is extremely welcome.

Mr. Michael Shaw: I should like to support my right hon. Friend's arguments. The Treasury could have gone that bit further. One has only to look at some simple examples to illustrate the case that has been made. Let us look at a child who has been injured in a motor car accident. It so happens that the accident was the fault of someone who was not insured, and who had no private funds. Under those circumstances, there is clearly a case for personal damage. If it goes to court, and the claim is quantified, it will never be met, because the person concerned did not have an insurance policy covering him or any private funds. Had he been insured, there would have been a claim which would have been met and the money from it would have gone into a fund, the income from which would have gone each year to the child and would not have been aggregated with that of the parent.
In the case in which there was no insurance and the person concerned was a man of straw, although the claim could be quantified, and although a grandparent might be willing to pay a similar sum of money into a fund, the proceeds each year would be regarded as the income, not of the child, but of the parent and would be aggregated for tax purposes.
The essence of this matter should have been to consider the character of the capital sum involved and the reason for the existence of the trust rather than the source from which it came. While we must be grateful for the Amendment, the logic of the situation, if logic there be— I believe that humanity guided the Chief Secretary rather than logic—should have allowed him to go that bit further and include all trust funds which arise, by whatever means, because of the illness or mental or physical condition of the child.

Mr. Fletcher-Cooke: I am troubled by the word "damages", which implies to me damages awarded in or out of court. It implies an adverse action—that is to say, a mishap due to the negligence or perhaps even the active wrong of another person, perhaps a driver, doctor, or drug firm in the case of a thalidomide baby.
Is it apt to cover cases in which no one is at fault, in which there is no adverse action, and in which the mishap is a pure accident and the compensation is paid purely from insurance?
Suppose that a child is insured against personal injury by its parents and, through nobody's fault, it falls out of a window or into the fire, or its nightdress catches fire. There is no negligence, but the compensation is paid on account of the child's insurance. I do not regard that as damages in law. My concept of damages is something which results from a claim against someone who has been negligent. I am concerned to ensure that the matter is not limited to damages in the sense in which I understand the word, but includes the sort of insurance compensation which I have mentioned.

Mr. R. J. Maxwell-Hyslop: I propose to mention the points to which my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke) has alluded. I am glad that he has done so,


because he is legally trained and I am not.
There are a couple of other aspects of the same general problem on which I should like the Chief Secretary's advice. What about ex gratia payments in cases in which no claim has been formulated? It is not unknown for ex gratia payments to be made. They may be made without prejudice or by a wealthier person or body to a less well off person who has suffered an accident and has no cause in law to plead in court. So there is no question of damages there.
What happens, for instance, with children in this case, who are injured in an air crash? As the Chief Secretary may possibly be aware, under the Carriage by Air Act there are automatic damages— this is the ratification of the Warsaw Convention, is it not?—and the limit has been doubled. There is no question there of having to prove negligence. All one has to show is that one suffered damage in an aircraft which met with an accident. One doss not have to show that the airline or pilot vicariously or individually were responsible for it. Indeed, if one can show that the pilot was guilty of wilful negligence then, of course, the limiting provisions of the Act or the Warsaw Convention do not apply. So I think that my hon Friend has raised a point of very real substance here, because I doubt very much whether it was the intention of the Government to exclude cases of that kind.
There is another point on which I seek information. Were I a lawyer I should know the answer, but I have a very distinct impression that damages given in court are very often quite unpredictable. There is not a table laid down which says, so much for a leg, so much for an eye, so much for a lung. That is why, so often, people are advised to settle out of court. One has the distinct impression that factors which are not directly related to the legal rights and wrongs come into the assessment of damages. For instance, if a child has been left £5,000 by its grandmother, can we be sure that this will not influence the judge in the award which he makes of damages?
One suspects, very often, that what the judge says is, "What amount of money will this child need when it reaches

mature years to ensure as reasonable a life as it is within the power of the court to endow him with?" If that child is the beneficiary of a trust fund, that process working in the judge's mind is likely, to put it mildly, to reduce the damages slightly, or, at any rate, reduce the sympathy, and even judges are human, with which the court regards the case when quantifying damages. If such a trust fund is to be grossed up rather than be subject to the relaxing provisions of Amendment No. 154, I think it will result in quite extraordinarily complex situations.
So I would certainly endorse what my hon. Friends have pressed, namely, that this Amendment certainly could be accepted but that it should be redrawn very much more widely, or that there should be another Amendment in addition to it so that the benefits, if we can use such a term in a situation which is inherently disastrous for the person concerned, are not so unnecessarily restricted as they will be by the drafting of the Amendment.

Mr. John Smith: I should like to say a brief word about Amendment No. 156, which has been selected with the other Amendments but which deals with Capital Gains Tax. The Chief Secretary did not, I think, mention this Amendment when he spoke. In Committee, I urged that if the income of children and parents were to be taxed together, as the income of husband and wife is already taxed together, then the transactions between children and parents should not be subject to Capital Gains Tax, in exactly the same way as transactions between husband and wife already are not subject to Capital Gains Tax.
I think that the Chief Secretary, if he thinks for a moment, will realise that this Clause is bound to give rise to an increased number of such transactions. This is a very material point. The analogy is exact with husband and wife. Does this Amendment effect what I urged the Chief Secretary to effect in Committee, or, if it does not, as I fear, will the right hon. Gentleman undertake to deal with this point later?

9.45 p.m.

Mr. Diamond: Whenever anyone raises a new legal point, I think that it deserves careful consideration and not


off-the-cuff answers given by a non-lawyer. Even if given by a lawyer, I still think that they should not be off-the-cuff answers. We are in the fortunate position that the legislation here, although we are on Report stage, is not required until next year. I could give off-hand indications, but it would be more sensible for me to take careful note of what has been said.
I am not advised that I can give a clear answer immediately to the point that has been raised. It is clear that we all want to see that the exemption from aggregation is not limited by the sheer coincidence or happening that there was no pressure, there was no court case, or there were no proceedings before the money arrived; that one form of pressure for the money resulted in exemption from aggregation, because it was damages in the ordinary accepted sense, and another form of pressure did not so result. I am sure that is not what we want. We want to achieve what I have indicated.
Equally, I am sure that we want to see that there is some relationship between the payment and the damage suffered by the child in the non-legal sense. Therefore, I think it would be far more sensible that I should undertake to give careful thought to everything that has been said, particularly on this new point and on the wording of the Amendment, as we have a full year in which to consider all that. I hope that what I have said indicates the way in which the Government are thinking about this matter.
On the other hand, I think that I can deal straight away with what was said by the hon. Member for the Cities of London and Westminster (Mr. John Smith) about Amendment No. 156. The effect of that Amendment is that, for the purpose of calculating Capital Gains Tax under the alternative rate, about which the hon. Gentleman was concerned, aggregation under this Clause will be disregarded and any sum which would otherwise be caught by Section 397 but is regarded as the child's income by virtue of the amended £5 exemption will also be treated as his income for the alternative rate Capital Gains Tax computation. I think that that meets the point put to me by the hon. Member

for the Cities of London and Westminster.
I hope that the House will not believe that the Government have been unsympathetic or lacking in compassion in dealing with this matter. We are dealing with aggregation, nothing further than that. I illustrated in Committee that it has previously been the practice of all Governments, when dealing with aggregation of income for tax purposes—I have in mind particularly covenanted income of the children which, by law, belongs to the children, but which, for tax purposes, is treated as the income of the parent or covenanter and is, therefore, aggregated with that—wholly to disregard any compassionate circumstances affecting the parties concerned.
I recognise that it was our duty to respond to the points made to us, particularly about the thalidomide children, and I think that we have carried that out—I agree with the hon. Member for Scarborough and Whitby (Mr. Michael Shaw)—with a mixture of logic and compassion.

Amendment agreed to.

Mr. Iain Macleod: I beg to move Amendment No. 67, in page 10, line 36, after 'infant', insert:
'who has not passed the upper limit of the compulsory school age as defined in section 35 of the Education Act, 1944 or any statutory re-enactment or modification thereof'.
We welcome the concession which has just been made and we are also grateful for the undertaking that in the coming year the Chief Secretary will consider the points which have been made.
The Amendment provides us with the last opportunity that we shall have of discussing the Clause. I have made no secret from the beginning that I detest this Clause more than any other part of the Bill. It offends me more than the special charge, more even than the infringement of the Married Women's Property Act, and more even than the massive increases in taxation which have taken place.
I made it clear in Committee, and I do so again now, that, subject to the right of a Chancellor to move against tax evasion, we shall have nothing to do with the Clause, and that we shall repeal it at the earliest possible opportunity.
We have this one last chance of putting a particular point to the Chief Secretary, and this is concerned with the aggregation of the income of infants from the compulsory school age until they reach their majority if they are being educated. The injustices done by the Clause are manifest. Only one of them, the small concession which we have just discussed, has been put right.
Thousands of people are affected by the Clause, and we tried in Committee to put forward an Amendment which, on reflection, I agree was too wide, that the Clause should not apply to children being educated. The Chief Secretary said, perfectly fairly, that that was, in effect, a wrecking Amendment, because it would mean that only children under 5 with investment incomes would be affected by the Clause, and clearly that would deprive the revenue of £25 million which the Treasury hoped to obtain.
I am not particularly moved by the fact that it was a wrecking Amendment. I intend in due course to wreck the Clause, but one must keep within the limits of debate, and it was a valid point. We have, therefore, limited the Amendment to add the words
who has not passed the upper limit of the compulsory school age
as defined appropriately.
It is common ground between all political parties, and, in particular, between all Secretaries of State for Education and Science of those parties, that it is desirable that children should stay at school for as long as they can benefit from schooling. That is not only desirable educationally. It is a vital part of the present and future economic strength of our country. There is no argument about this. The parties agree with it, and many people found it very sad that one of the consequences of the January economy cuts was that the raising of the school-leaving age was further postponed.
I need not argue that the Amendment is educationally, economically and socially desirable; that is manifest. It is part of the policy of all three parties in the State. But the Clause says something quite different; it says that in circumstances in which an infant has investment income of its own, from whatever source—perhaps left by a grandparent, or derived in some other way—that income shall be aggregated with the income

of the parent or parents unless the child is wholly employed in conditions defined in the Clause.
There is a direct inducement to the parents of children who may happen to have a little investment money of their own to take their children away from school and put them to work at the earliest opportunity. That proposition is more appropriate to the Victorian warehouse than to the modern educational system. I need not argue the point; it is self-evident. It is extraordinary that in due course the Chief Secretary will rise at the Dispatch Box and, with his usual courtesy and skill, attempt to refute something that is simply irrefutable.
There are two propositions on which I rest my case. First, it is common ground between all parties that all children who can benefit from schooling should stay at school certainly for the key years of their education. Secondly, it is common ground between us that it is undesirable that such children should be taken away from full-time schooling and pushed into full-time work. It is to put right this anomaly that the Amendment is moved.
In Committee, I referred to what I called the philosophy and policies of envy which are enshrined in the Clause. I have always detested this approach. Some grandparents may think it a suitable use of the money that they have earned as a result of their labour in life to help their grandchildren. For the life of me I cannot see what is wrong with that. Those who took part in the detailed debate upstairs know that the Clause is full of absurdities and cruelties; indeed, it was the result of the opposition from my hon. Friends to this Clause that brought down the guillotine in the end—an event unprecedented in more or less modern times.
I sum up by saying that the Amendment simply cannot be challenged on educational, economic or social grounds. We know the harm that the Clause will do. It will bring a great deal of distress to many women—especially divorced women. It will throw an unnecessary burden on to some children—especially children who are already deprived.
So, as one last try to make a little more sense of a thoroughly bad Clause, we put this proposal before the House. It simply says that the Treasury should


recognise what is recognised by all the political parties, namely, that no obstacle should be put in the way of children remaining in full-time education and benefiting from that education.

10.0 p.m.

Mr. Michael Shaw: I wholeheartedly support my right hon. Friend in this Amendment and in saying that we object to the whole Clause and are simply trying to improve a thoroughly bad Clause. On Second Reading, I spoke about this Clause, and said:
Some things about the Clause are particularly obnoxious. One implication is that when a child leaves school and has to make a choice between going into industry and going on to further education, his need for further education for further vocational training may not be the paramount consideration in working out his future career."—[OFFICIAL REPORT, 24th April, 1968; Vol. 763, c. 368–9.]
I went on to give an example which should, I hope, be near the heart of the Chief Secretary, namely, the alternatives facing a father whose son might choose the career of accountancy.
In making that choice, the son could first go to university and then take articles, or could go straight into a firm, taking articles immediately. If that child had an investment income and went to university, that income would continue to rank for tax purposes as his father's. If, on the other hand, we went straight into articles with a firm and earned a salary, that investment income would no longer be regarded as his father's—[HON. MEMBERS: "It is crazy."] This seems absurd, "crazy", as my hon. Friends say.
These alternative arrangements, when they are thought out in the family circle must include in their consideration the thought about the tax liability of the parent who is helping to decide what shall be done. The child's educational requirements are not the only considerations in circumstances like this. Surely it is essential that we should try as far as possible to see that, when a child's career is being planned in the home, the only factors which shall be considered are the future of the child and the best education or preparation which he can have for his future career. Such considerations as the tax burden on the parent should not have to come into the matter.
Therefore, as I said on Second Reading, if we must have a Clause like this, it should be limited to the compulsory school leaving age limit, which is 15. In our rough and ready way, my hon. Friend the Member for Ormskirk (Sir. D. Glover) and I put down an Amendment to that effect in Committee. Alas, it was not called. I am grateful to my right hon. Friend not only for having put it forward in more sophisticated form, but also for having been successful in having it called.
This gets at the nub of the Clause. If we have to have it, so be it—let us have aggregation, as long as the child has no alternative than to stay at school. But once alternatives come in and a choice of careers is available to the child, once it is possible to go one way and relieve the tax burden of the parent, or to go another way to continue that burden for several more years, we are getting on to very dangerous ground and are influencing decisions which may be against the true interests and future of that child.
As long as we have this Clause—and I hope that it will not be for long—I believe that the Amendment ought to be incorporated.

Mr. Richard Wainwright: The concept which the Government thought out to try to rationalise their aggregation Clause is, to use the Government's own words, that of the "common spending unit". As I made clear in Standing Committee, Liberals have never accepted that, even if there is a common spending unit, it should necessarily involve those people in being an aggregated taxable unit.
But insofar as they stick to the idea that the common spending unit should, therefore, be a common tax unit, the Government ought to welcome the Amendment, because if there is any water at all to be held inside the idea of a common spending unit, it certainly drops out the moment the school leaving age is passed. That is a matter of common observation which must be apparent to hon Members on all sides of the House. The moment a young person passes the school leaving age, whether he or she continues in full-time education or takes a job, in the ordinary habit of contemporary life he or she drops out of the common spending unit of childhood.
I particularly resent the way in which this part of the Clause tries to drive a wholly artificial wedge between young people who are continuing their education and those who are gainfully employed. I draw attention to the words "working regularly" and "full-time occupation". In the ordinary use of language, those words manifestly apply to the young person who stays on at school to try to get good A levels. Few young people are working more regularly or are more fully occupied than those who are trying to get good A level results.
But, as is so often the case in our tax Statutes, the English language has to be distorted to make "working regularly" and "full-time occupation" mean, for this purpose, something quite different from what is the common understanding of those terms. The Government are introducing an entirely artificial concept, one which I am sure will be rejected by the vast majority of young people of the ages affected, quite apart from their tax-paying parents. If only to rescue their own concept of a common spending unit, I hope that the Government will accept the Amendment.

Mr. John Smith: This is a very good Amendment because it mitigates the most decadent aspect of all of the Finance Bill—the suggestion that we should live off our children.
Indeed, far from extending to children the barbarous custom of treating a wife as the property of her husband for tax purposes, we should be freeing wives and giving them independence and equality with men. We on this side of the House certainly believe in the sanctity of the individual and believe that each should be treated separately. It is typical of Socialist Governments that they should seek to chain us together in gangs—to chain families into common spending units. It is an insult to deny children, these human beings, a separate identity.
The Government have used the analogy of something bad—the barbarous custom which I mentioned of taxing a husband and wife together—in order to enact something worse. We ought at least to accord the dignity of a separate identity to human beings who have grown up and left school. The Amendment gets us

away from one of the great difficulties of interpretation in the Clause, the difficulty of defining when a child is working "full time" at a job and
intends to be regularly engaged in it.
How is an intention to be measured? Many hon. Gentlemen opposite intend to be "regularly engaged" here. What happens if a child loses his job, as some hon. Members opposite will? His intention and their intention was to remain in it. What happens if a child goes on strike, as most of mine do practically all the time?

Mr. Speaker: The hon. Gentleman will not be out of order if he comes to the Amendment.

Mr. Smith: I willingly admit that I am practically always out of order, but I am here describing the series of ill effects and difficulties of interpretation which arise if the Amendment is not accepted. If children lose their jobs, after they leave school, or go on strike, suddenly their parents are liable to pay their tax, and that places in their hands a dangerous weapon.
The intention mentioned in the Clause is also related to a minimum period of 15 months between two periods of education. That would vanish if the Amendment were accepted. When a child takes a job, how is it known whether the period will or will not exceed 15 months? Are the tax returns for everybody to be held up for 15 months until we see what happens? Furthermore, 15 months can cover three tax years. Is income to be apportioned for parts of years? Presumably the phrase "regularly engaged" means that one is allowed to break it off. If it were not so, there would be no point in mentioning a minimum period of 15 months.

Mr. Diamond: If the hon. Gentleman would be good enough to read the HANSARD record of the debates, he will find not only what he has said but what he is going to say and my full replies to all those arguments.

Mr. Smith: I do not see why I should not quote myself. I often do, and it lends spice to my conversation.

Mr. Speaker: The hon. Gentleman must not intervene in his own speech.

Mr. Smith: I was glad to see that this habit of quoting oneself has spread from Enfield to Whitby. Unless we accept the Amendment, we must also interpret what is a full-time occupation, and I warmly endorse the admirable point which was made by the hon. Member for Colne Valley (Mr. Richard Wainwright).
There are many difficulties here. Is a boy at a choir school paid for by way of scholarship in a full-time occupation? Is there a definition of "full time"? What about people who are paid to attend a course? What about members of the Services who are at university? Is that an occupation, or is it education? A distinction will have to be drawn because of the minimum period of 15 months. Who decides all these matters? Who decides all these important matters of interpretation—

Mr. Speaker: Order. With respect, I enjoy the hon. Gentleman's speeches. He is speaking at the moment about subsection (3) which we are not debating. He must come to the Amendment which he is seeking to support.

Mr. Smith: Mr. Speaker, there are these difficulties, which I think that I have sufficiently indicated, and there are the difficulties about stepchildren, which I went into in some detail in Committee. All of them will vanish if the amendment is accepted because they all occur after a child leaves school.
In the short period of office remaining to them, if the Government must enact this decadent measure and take a bite out of our children, then I hope that they will at least reduce the bite in the way suggested in the Amendment.

10.15 p.m.

Mr. George Lawson: My heart is wrung when I hear these statements about our children and what is likely to happen to them under this Clause. I am struck by the effort to so change the Clause that it shall not apply after the age of 15.
However, it seems to me that it would not matter. Probably two-thirds of our children normally leave school at the age of 15, and in my part of Scotland substantially more than two-thirds of them leave before they are 15. We hear all these heart-rending sobs about the youngster who will go on to become an

accountant, or who will go to a university, but what about the youngster who leaves school at 15?
What has been uncovered and what is being dealt with in the Clause as it stands is the widespread practice of tax avoidance which has grown up. I understand from an earlier statement that the savings in tax avoidance will amount to about £25 million. That does not sound much like a grandparent here and there, as one would gather from what right hon. and hon. Gentleman opopsite have said.
The right hon. Member for Enfield, West (Mr. Iain Macleod) referred to the grandparent who puts aside a little money for his grandchild. It is apparent that a very large number of grandparents have been engaging in this practice, and if it is one which has become sufficiently widespread for the introduction of this method of beating tax avoidance to mean a saving of £25 million, it would appear that very many of the people whom I represent have been paying more tax than they should have been.

Mr. Michael Shaw: Does the hon. Gentleman realise that it was disclosed in Committee from his side that if children's incomes of under £115 a year were excluded from aggregation, which is a figure well within the possibilities of savings at Christmas, and so on, half the benefit in tax would disappear?

Mr. Lawson: I have looked into this point. If the people whose youngsters customarily leave school at 15 properly understood the tax system in this respect, there would be a revolution next week. A youngster leaving school at 15 and beginning to make a contribution at home is considered to be keeping himself and is no longer someone for whom his parent can obtain tax remission. But if he continues at school and goes on to university, his parent claims the tax remission. He may get a grant of as much as £370, and he can earn up to £115 without it coming into the purview of the taxation law.
The youngster who starts to work at the earliest age possible is treated quite differently, and what right hon. and hon. Gentlemen opposite seek to do by this Amendment is still further to extend this kind of protection. It is a device that has grown up to benefit people with youngsters who want to go on and on at school,


and then to obtain degrees and so on enabling them to earn so much more subsequently. Hon. Members opposite want them to make the money as easily as possible and want as much as possible to be paid for by tax avoidance.
The hon. Member for Cities of London and Westminster (Mr. John Smith) does not know what some youngsters are like and the conditions in which they grow up. He talked about living on our children. What does he know about living on children? This is the kind of thing that has gone on too long. I could describe the circumstances in which many of our youngsters still grow up. Hers is a device whereby taxation payments will be remitted to the better off, or not paid by them, but it must in some way be added to the burden carried by the poorer people. If the House wants to do something to help the youngsters, it should help the poorer youngsters.

Mr. John Smith: If the hon. Gentleman wishes to continue to abuse me, I hope that my intervention rather early in his speech will not prevent him from doing so. I think that he imagines that most of the income which children may or may not have comes from gifts. But the great majority comes from money which has been left to them. Does he think that death is a form of tax avoidance?

Mr. Lawson: That intervention does not help. Do the youngsters begin to earn? Not so very long ago I knew youngsters who were beginning to make a contribution to the family income at the age of 9 or 10. It would be different if we were talking about youngsters who earned some money, but are our hearts to bleed because we hear that a youngster has a personal income from money left to him and that income is to be aggregated with his parents'? Why should not the income of such a child who has been left some money by grandparents, wealthy uncles or somebody else be aggregated with his parents' income? That is fair, is it not?
Hon. Members opposite show very well where their interests lie. They are interested always in guarding privilege or developing another form of it. No sooner are little holes stopped up. or sometimes very big holes, than another is created by the brains of hon. Members opposite. The right hon. Member for Enfield, West looks at me as if he does not believe me, but he knows this very well.
I just came in to hear the debate, and I am very happy to have been able to put in a word for the youngsters that I represent, who matter so very much. They leave school at 15, and in many ways we shall find that it is they who get the raw deal, not the youngsters whose total income amounts to so much that by the provision we are discussing £25 million more in taxation will be obtained. That is a lot of money, which does not involve very much hardship. I am delighted at this, and I shall listen with great care and attention to my right hon. Friend's case. I am absolutely with him, as are my hon. Friends.

Mrs. Jill Knight: I did not have the benefit of serving on the Standing Committee, but I am fascinated by the Amendment and wish to put one small point. I understand that shortly the age of majority will be 18 and not 21. I believe that the Government have accepted this. What happens to the Clause then? We are already discussing the charming thought of infants who are unmarried and not working. I have a couple of infants who are unmarried, and it will not be very long before the eldest reaches the new age of majority.
It seems to me that it is extraordinary that we apparently are now discussing the possibility of an infant reaching the age of majority at 18 and yet still having his income lumped in with that of his parents. When the right hon. Gentleman answers this excellent Amendment, will he please cover this point?

Sir Douglas Glover: I do not propose to follow the hon. Member for Motherwell (Mr. Lawson) into the wild ideas which he has tried to stir up in what had up to then been a very sensible debate.
Our argument is very much on the lines of trying to achieve what the hon. Member was talking about—improved education for all children. It is the wish of every education authority to persuade as many parents as possible to leave their children at school after the minimum leaving age of 15, and we are proud and happy that over the country as a whole already at least 30 per cent. are staying on. We are seeking in the Amendment to take away any incentive for parents to take their children away from school at an age earlier than they otherwise would have done if the Amendment were rejected.
In these debates it is always generally assumed that every parent is a most desirable one. This does not necessarily follow. When we talk about children who have inherited some wealth, it may be that the grandparent left money to the grandchildren because he was by no means certain about the judgment or generosity or in some cases the love of the parents for the children. So the grandparent may have left out one generation and bequeathed his money to his grandchild deliberately and with a very definite purpose.
Out of a population of 50 million there must be a considerable number of parents whose marriage is under strain and where there is tension in the household. This may be why the grandparents have left money directly to their grandchildren. The hon. Member for Motherwell and the Chief Secretary must realise that, with aggregation, there is enormous pressure in such a household to take the children away from school at 15 and put them into earning employment so that their income will not be aggregated with that of their parents. Here is a direct incentive for such parents to take their children away from school and so reduce the standard of their education.
At a time when we are trying to get the school leaving age raised right across the board and to get children to stay at school until a later age, it is not in the national interest for anything to be

done which provides an incentive, however small, to parents to take their children away from full-time education because it is in their selfish financial interest to do so. By aggregation the Government are making it in the direct selfish interest of such parents to take their children away from full-time education at an earlier date than they would otherwise do if the Government had not brought in this class-conscious, vicious Clause, based on jealousy. This is what is behind it, and it is unworthy of the right hon. Gentleman. I hope that in view of the argument that he has heard tonight he will, even now, accept my right hon. Friend's limited Amendment, which I believe goes the minimum distance to deal with a problem which should be dealt with in this year's Finance Bill.

10.30 p.m.

Mr. Diamond: We had many debates on this topic upstairs and out of them it became clear that there is a fundamental and sincere difference of view between the two sides on the principle of aggregation of children's income. We therefore must recognise in this debate that there are sincerely held utterly opposing views. The debate has brought out once more that those views are totally opposed and we must recognise— and no one could have been more straightforward than the right hon. Member for Enfield, West (Mr. Iain Macleod)—that the purpose of the Opposition is to destroy the functioning of this principle and this central Clause or, so far as they cannot destroy it, to reduce its effectiveness.
It is not easy to deal with an Amendment without putting it into context. I hope that I may do so without going wider than the speeches which have been made and to which these remarks form the major reply. I want to take hon. Members with me through the different stages of what a grandfather might wish to do in order to help the growing family of his son or daughter. Many of us must be in this position. The son is newly married or starting to have a family, expenditure is great and the salary small. The grandfather may be able to help and is anxious to do so. He may wish to provide an income either in the form of a covenant or through settling capital in one form or another. He can do this in one of several ways.
He can say to his son, for example, "You need help and I propose to settle some money on you". Secondly, he can settle the money on his daughter, if she is the child in question. Thirdly, if there is one grandchild, he can settle the money on that child. Fourthly, if there are two grandchildren, he can spread the money between the two.
If he picks the first course—and in all four cases the income available for the married couple with their children is identical—there is a certain amount of tax payable by the parent because it is the income of the father. If he takes the second course, there is the same amount of tax payable by the parent because it is the income of the mother, and aggregation between mother and father has been accepted and carried out in practice by all Governments for very many years. [An HON. MEMBER: "It should be stopped."] When the hon. Gentleman is leading a party with the full support of the country in order to carry out his ideas as opposed to those of the Conservative: Party, no doubt it will be stopped, but meantime, if we are to deal with the world of reality, aggregation of the mother's and father's income is the policy and has been since every hon. Member has been alive. So, if the money is given to the mother, who happens to be the daughter of the well disposed grandparent, the same tax is payable as if it were left to the father.
But it it is left to the child, more particularly if the same given amount, to be most advantageous for tax purposes can be divided between two children, a totally different amount of tax is payable by that family. The same income is available and it comes from the same source and it is available for the spending of a family of identical size. We will assume that that family needs it, and I have postulated that the family needs to spend it and is spending it. It is spending the same amount, but a totally different tax is available. Why? The reason is because we have previously not extended the principle of aggregating income as between wife and husband to the whole of the family. All the members live together as a family; they are a family unit; they are a single family unit; they are a single spending unit. It

is sensible and right that the same tax principles should follow that.
What is happening, however, is that an artificial series of arrangements has been made as a result of which, instead of the grandfather in question helping either his son or his daughter, being the mother or the father, he has been giving money to his grandchildren. Grandfather has said after Sunday lunch, "Let me go up the nursery and see how the babies are doing". He has gone up to one of the babies and said, "You are doing fine; here is £500 for you to spend yourself". That is what the hon. Member for the Cities of London and Westminster (Mr. John Smith) is talking about.

Mr. John Smith: rose—

Mr. Diamond: I give way with pleasure.

Mr. Speaker: Before the right hon. Gentleman gives way, he has so far been discussing the Clause. I hope that he will now come to the Amendment.

Mr. Diamond: You are, of course, absolutely right, Mr. Speaker. I prefaced my remarks by saying that I would seek to put the Amendment in context, but I have clearly gone too far and I offer you my unreserved apologies, and I come at once to saying that the Clause, which seeks to withdraw the benefits obtained by these largely artificial transactions, will save the Revenue, the taxpayer generally, as my hon. Friend the Member for Motherwell (Mr. Law-son) correctly said, the general body of taxpayers, including the poorer, £25 million, is now sought to be amended in respect of children above the maximum school leaving age—
an infant who has not passed the upper limit of the compulsory school age as defined in section 35 …
The age which we can take for this purpose is 15, and it is suggested that beyond this age aggregation should cease.
The only argument advanced in support of the Amendment has been that aggregation would encourage parents to take their children from school at the age of 15. It is seriously suggested that parents with children in the fortunate position of having an income of their own of a size sufficient to be relevant


for Income Tax purposes will take their children from school in order to save themselves a slight further embarrassment of further taxation when, without aggregation, they would otherwise press them to remain at school.
The right hon. Gentleman put this forward. I have never heard him say anything in which he did not believe, and I do not understand how he believes in it. It is inconceivable. Of course the principle behind this is one that I accept. Of course we should encourage children to stay at school. I am aware of this. I served for years as a member of the board of governors of an East End grammar school and I know of the pressures put upon scholarship children from poor families to get them away from school before the compulsory leaving age, in order to enable the family to keep on living. They were regarded as an earning unit, earning nothing at school.
There was no question of these children having an income of £115 a year. Think of what capital is involved when a child has such an income. I deny absolutely that there is a single parent alive who, in the circumstances postulated by the right hon. Gentleman, would dream of taking his child away from school. This has nothing to do with education, it has to do with the fact that the right hon. Gentleman and the Tory Party dislike this artificial method of tax avoidance being brought to an end, and this is the difference between us.

Mr. Richard Waiwright: Before the Chief Secretary sits down—

Hon. Members: He has sat down.

Mr. Speaker: Order. We have too many Speakers at the moment.

Mr. Wainwright: Will the Chief Secretary deal with the separate argument that where the child remains at school, accepting for the time being the point that he has made, there is a distinct unfairness in the treatment of the child still at school, within the family? There is this unfairness, quite apart from the deprivation of education. There is an obvious unfairness between the treatment of the child working hard for A levels and a child who is gainfully employed.

Mr. Diamond: I did not attempt to deal with all the points raised, because we are dealing here with a matter of fundamental principle, and most of the points raised were not related closely to the Amendment. I did not deal with the point raised by the hon. Member for Birmingham, Edgbaston (Mrs. Knight), who asked me about the Latey Report and its effect. This legislation will not come into effect for one year, so that inquiries can be made. It is possible that in the course of a year circumstances will alter and there will be new education provisions. This is fully recognised, and the hon. Lady will find that the matter was fully debated in Committee.
As to the point raised by the hon. Member for Colne Valley (Mr. Richard Wainwright) about the unfairness between the boy working hard for A levels and the apprentice, working hard, I must return to the principle to answer this. The principle here is that the family spending unit becomes two units when one of the children is, as it were, on his own, earning income. That is the only definition that fits the principle. [Interruption.] There is every good reason for taking the Bill in Standing Committee upstairs where we have sensible, sober discussion.

Mr. Speaker: Order. I want the right hon. Gentleman to keep within the bounds of order.

Mr. Diamond: As the hon. Gentleman who was most assiduous in his attention in Committee will, of course, know, that is the reason why we distinguish between earned income and unearned income for this purpose.

Mr. Fletcher-Cooke: In this Amendment we are dealing with children from 15 to 21, if men and women of 20 can be described as children. The advantage of this Amendment is that almost all the difficulties in the actual operation of the Clause, irrespective of its merits, would fall away like scales if it were accepted. All the problems about when somebody is working full time, all the problems of when they are living away and not in control—all of those disappear if the age is reduced from 21 to the minimum school leaving age.
Very briefly, because we have been through this matter many times, I want


to give two examples of the enormous anomalies which will result, and the unfairness which will result, if the age of the children is to go up to 21. The first one is in the case of the poor child of rich parents, and the second is in the case of the rich child of poor parents. They are not, I think, extreme cases, but they are unusual.
Let us take, first, the poor child of rich parents—say, of a mill owner, who wants his son to go into the mill, as he did, when he is 16 or 17. That is not an uncommon situation. The father is rich, and the son does not want to. The son is, say, a musician, or something of that sort, and wants to pursue his studies, and has got a place, say, at the Royal College of Music, and wishes to see if he can make out there. The father dislikes this and says, "I cannot stop you, but you will not get a penny from me, if you will not go in the mill." [An HON. MEMBER:"Must be a Tory."] Maybe a Tory, maybe a Liberal, maybe Labour, but, at any rate, that is the position, and the son looks round and manages to get, say, an old aunt or a well-wisher to pay him £10 a week so that he can make out as a student and take up his place in further education—as I suggest, at the Royal College of Music.
That is unearned income and, therefore, will be aggregated with the rich father's income, and whereas today the son could pursue those studies, because he could probably live on £10 a week, it will be reduced to about £3 if his father is rich enough, and so the son will have to go sadly back to the mill, where the irony is so great, because the irony is that it will then be earned income, and although he is living at home in luxury, but genuinely in the common spending unit, as the Chief Secretary would say, his income will not be aggregated with that of the mill owner. What is the fairness in that? I hope that is not a situation of which the Chief Secretary is proud.
The second example is almost worse. It concerns parents earning, say, £1,500 or £2,000 a year when their son is left a lot of money directly by a remote relation in Australia—[Interruption.] I see nothing wrong with that example. It has happened more than once, but not to me—[Interruption.]

Mr. Speaker: Order. With respect, the temptation in this debate has been to debate the Clause. The hon. and learned Member will not be out of order if he comes to the Amendment.

Mr. Fletcher-Cooke: The Amendment deals with children from 15 to 21. My contention was that if the Amendment is accepted all these anomalies and difficulties will fall away like scales. That was the purpose of these examples.
The second example is where a boy of 18 or 19 is left directly an unexpected small fortune and he decides to leave the home and goes up to London to live it up with wine, women and song.— [HON. MEMBERS: "Shame."] I agree that is very bad. But what happens then—[Laughter.]

Mr. Speaker: Order. May I remind the hon. and learned Member that the Amendment we are discussing speaks about infants who have not passed the upper limit of the compulsory school-leaving age.

Mr. Fletcher-Cooke: The example that I have taken is of someone above the school-leaving age, though below the age prescribed in the Clause.
What happens immediately is that the father is irretrievably ruined, because the income of the son, over which he has no control, is aggregated with the father's and probably the tax that he has to pay is greater than his whole income for the year. It is no good the Chief Secretary saying, as I am sure he would, that he can get it back from the son in due course, because it will have gone—dissipated by his profligate behaviour.
I could give more examples of the anomalies, injustices and general bad management that will result from the Clause as it stands. If the Amendment is accepted, the Clause will at least be workable. It will be understandable, even if it is wrong, and at least it will not be an offence on the Statute Book. For this reason, with the House in its full mood, as it is, and with the debate having gone on not merely tonight, but over the last four weeks, when I think we may safely say that if he have not won in the Lobbies we have won in the arguments, I suggest that we come to a decision by recording, once again, our fundamental opposition to any idea of


a common spending unit among people of 18, 19 and 20, most of whom probably left home years ago.

Lieut.-Colonel Sir Walter Bromley-Davenport: Little did I think as I wended my way to the Chamber that I would be fortunate enough to catch your eye, Mr. Speaker. I had not intended to intervene in the debate. I have not, I regret to say, attended the debate for the last hour and a half. Therefore, I have missed all the tripe that has been talked about.
Let me put this whole matter into a nutshell. [Laughter.] This is a hate tax. The object is twofold, and hon. Gentlemen opposite have had letters from their constituents saying what I am going to say to them. The first object of the exercise is to destroy the fee-paying schools. The next is to prevent those who can afford to give their children a better education from doing so.

Mr. Speaker: Order. The third object is to keep in order in the debate.

Sir W. Bromley-Davenport: I have prepared a long speech which now appears to be rather out of order. It is with regret that I shall resume my seat.

Mr. Iain Macleod: I hope that the House will forgive me if I say that I regard this as a matter of the utmost seriousness. It is appalling that as we have gone through the Clause and the Schedule hour after hour the only trifling concession that we have wrung from the Chief Secretary is in relation to thalidomide children. What right hon. and hon. Gentlemen opposite can find funny in this passes my comprehension. It is disgraceful. We have heard from the Chief Secretary and from the hon. Member for Motherwell (Mr. Lawson) the authentic voice of Stone Age Socialism. It comforts me at least that soon doctrines of this sort will be rejected by the people, just as we reject the Clause.

Question put, That the Amendment be made: —

The House divided: Ayes 138, Noes 192.

Division No. 266.]
AYES
[10.58 p.m.


Alison, Michael (Barkston Ash)
Gibson-Watt, David
Miscampbell, Norman


Allason, James (Hemel Hempstead)
Gilmour, Ian (Norfolk. C.)
Monro, Hector


Astor, John
Glover, Sir Douglas
Montgomery, Fergus


Awdry, Daniel
Godber, Rt. Hn. J. B.
More, Jasper


Baker, Kenneth (Acton)
Goodhart, Philip
Mott-Radclyffe, Sir Charles


Baker, W. H. K. (Banff)
Goodhew, Victor
Murton, Oscar


Beamish, Col. Sir Tufton
Cower, Raymond
Nabarro, Sir Gerald


Bennett, Dr. Reginald (Gos. &amp; Fhm)
Gurden, Harold
Nott, John


Biggs-Davison, John
Hall, John (Wycombe)
Onslow, Cranley


Black, Sir Cyril
Harrison, Col. Sir Harwood (Eye)
Osborn, John (Hallam)


Blaker, Peter
Harvie Anderson, Miss
Page, Graham (Crosby)


Boardman, Tom (Leicester, S.W.)
Hawkins, Paul
Page, John (Harrow, W.)


Bossom, Sir Clive
Heald, Rt. Hn. Sir Lionel
Pardoe, John


Braine, Bernard
Higgins, Terence L.
Peel, John


Brewis, John
Hill, J. E. B.
Percival, Ian


Bromley-Davenport, Lt.-Col. Sir Waiter
Holland, Philip
Pike, Miss Mervyn


Brown, Sir Edward (Bath)
Hooson, Emlyn
Pounder, Rafton


Bruce-Gardyne, J.
Hordern, Peter
Powell, Rt. Hn. J. Enoch


Bryan, Paul
Hornby, Richard
Pym, Francis


Buchanan-Smith, Alick (Angus, N&amp;M)
Hunt, John
Ramsden, Rt. Hn. James


Buck, Antony (Colchester)
Iremonger, T. L.
Rees-Davies, W. R.


Campbell, B. (Oldham, W.)
Jenkin, Patrick (Woodford)
Rhys Williams, Sir Brandon


Carr, Rt. Hn. Robert
Kershaw, Anthony
Rossi, Hugh (Hornsey)


Chichester-Clark, R.
Kirk, Peter
Russell, Sir Ronald


Clegg, Walter
Kitson, Timothy
Scott, Nicholas


Cooke, Robert
Knight, Mrs. Jill
Scott-Hopkins, James


Crowder, F. P.
Lane, David
Sharpies, Richard


Cunningham, Sir Knox
Langford-Holt, Sir John
Shaw, Michael (Sc'b'gh &amp; Whitby)


Dance, James
Lewis, Kenneth (Rutland)
Silvester, Frederick


Davidson, James (Aberdeenshire, W.)
Lubbock, Eric
Sinclair, Sir George


d'Avigdor-Goldsmid, Sir Henry
MacArthur, Ian
Smith, Dudley (W'wick &amp; L'mington)


Dean, Paul (Somerset. N.)
Mackenzie, Alasdair (Ross&amp;Crom'ty)
Smith, John (London &amp; W'minster)


Dodds-Parker, Douglas
Maclean, Sir Fitzroy
Stainton, Keith


Eden, Sir John
Macleod, Rt. Hn. lain
Summers, Sir Spencer


Emery, Peter
Maddan, Martin
Taylor, Frank (Moss Side)


Errington, Sir Eric
Maginnis, John E.
Temple, John M.


Eyre, Reginald
Maude, Angus
Thatcher, Mrs. Margaret


Farr, John
Maxwell-Hyslop, R. J.
Thorpe, Rt. Hn. Jeremy


Fletcher-Cooke, Charles
Mills, Peter (Torrington)
Turton, Rt. Hn. R. H.


Fortescue, Tim
Mills, Stratton, (Belfast, N.)
van Straubenzee, W. R.




Vaughan-Morgan, Rt. Hn. Sir John
Wells, John (Maidstone)
Wood, Rt. Hn. Richard


Waddington, D.
Whitelaw, Rt. Hn. William
Woodnutt, Mark


Wainwright, Richard (Colne Valley)
Williams, Donald (Dudley)
Wylie, N. R.


Walker, Peter (Worcester)
Wills, Sir Gerald (Bridgwater)
Younger, Hn. George


Walker-Smith, Rt. Hn. Sir Derek
Wilson, Geoffrey (Truro)



Ward, Dame Irene
Winstanley, Dr. M. P.
TELLERS FOR THE AYES:


Weatherill, Bernard
Wolrige-Gordon, Patrick
Mr. R. W. Elliott and




Mr. Anthony Grant




NOES


Albu, Austen
Gardner, Tony
Morris, Charles R. (Openshaw)


Alldritt, Walter
Ginsburg, David
Moyle, Roland


Allen, Scholefield
Gourlay, Harry
Neal, Harold


Anderson, Donald
Gray, Dr. Hugh (Yarmouth)
Newens, Stan


Archer, Peter
Greenwood, Rt. Hn. Anthony
Noel-Baker, Rt. Hn. Philip (Derby, S.)


Armstrong, Ernest
Gregory, Arnold
Oakes, Gordon


Atkins, Ronald (Preston, N.)
Griffiths, Eddie (Brightside)
Ogden, Eric


Atkinson, Norman (Tottenham)
Griffiths, Will (Exchange)
O'Malley, Brian


Barnett, Joel
Hamilton, James (Bothwell)
Orme, Stanley


Baxter, William
Hamling, William
Oswald, Thomas


Beaney, Alan
Hannan, William
Owen, Dr. David (Plymouth, S'tn)


Bence. Cyril
Harper, Joseph
Page, Derek (King's Lynn)


Benn, Rt. Hn. Anthony Wedgwood
Harrison, Walter (Wakefield)
Palmer, Arthur


Bennett, James (G'gow, Bridgeton)
Haseldine, Norman
Pannell, Rt. Hn. Charles


Bishop, E. S.
Heffer, Eric S.
Parker, John (Dagenham)


Blackburn, F.
Henig, Stanley
Parkyn, Brian (Bedford)


Blenkinsop, Arthur
Herbison, Rt. Hn. Margaret
Pavitt, Laurence


Boardman, H. (Leigh)
Hooley, Frank
Pearson, Arthur (Pontypridd)


Booth, Albert
Horner, John
Peart, Rt. Hn. Fred


Bottomley. Rt. Hn. Arthur
Houghton, Rt. Hn. Douglas
Pentland, Norman


Braddock, Mrs. E. M.
Howie, W.
Perry, Ernest G. (Battersea, S.)


Bradley, Tom
Hoy, James
Perry, George H. (Nottingham, S.)


Bray, Dr. Jeremy
Huckfield, Leslie
Prentice, Rt. Hn. R. E.


Brooks, Edwin
Hughes, Roy (Newport)
Price, Thomas (Westhoughton)


Brown, Hugh D. (G'gow, Provan)
Hunter, Adam
Price, William (Rugby)


Buchan, Norman
Irvine, Sir Arthur (Edge Hill)
Probert, Arthur


Buchanan, Richard (G'gow, Sp'burn)
Jackson, Colin (B'h'se &amp; Spenb'gh)
Rees, Merlyn


Callaghan, Rt. Hn. James
Jenkins, Rt. Hn. Roy (Stechford)
Richard, Ivor


Cant, R. B.
Johnson, James (K'ston-on-Hull, W.)
Robertson, John (Paisley)


Carmichael, Neil
Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)
Rodgers, William (Stockton)


Coe, Denis
Jones, J. Idwal (Wrexham)
Rose, Paul


Coleman, Donald
Kelley, Richard
Rowlands, E. (Cardiff, N.)


Crawshaw, Richard
Kerr, Mrs. Anne (R'ter &amp; Chatham)
Sheldon, Robert


Cullen, Mrs. Alice
Kerr, Russell (Feltham)
Shore, Rt. Hn. Peter (Stepney)


Dalyell, Tarn
Lawson, George
Short, Mrs. Renée (Whampton, N. E.)


Davidson, Arthur (Accrington)
Lestor, Miss Joan
Silkin, Rt. Hn. John (Deptford)


Davies, Ednyfed Hudson (Conway)
Lever, Harold (Cheetham)
Silkin, Hn. S. C. (Dulwich)


Davies, Harold (Leek)
Lewis, Arthur (W. Ham, N.)
Silverman, Julius


Davies, Ifor (Cower)
Lewis, Ron (Carlisle)
Small, William


Dell, Edmund
Lomas, Kenneth
Snow, Julian


Dempsey, James
Loughlin, Charles
Spriggs, Leslie


Dewar, Donald
Lyons, Edward (Bradford, E.)
Steele, Thomas (Dunbartonshire, W.)


Diamond, Rt. Hn. John
Mabon, Dr. J. Dickson
Swingler, Stephen


Dickens, James
McCann, John
Taverne, Dick


Doig, Peter
MacColl, James
Thomson, Rt. Hn. George


Dunn, James A.
Macdonald, A. H.
Tinn, James


Dunnett, Jack
McGuire, Michael
Urwin, T. W.


Dunwoody, Mrs. Gwyneth (Exeter)
Mackenzie, Cregor (Rutherglen)
Varley, Eric G.


Dunwoody, Dr. John (F'th &amp; C'b'e)
Mackintosh, John P.
Walker, Harold (Doncaster)


Edwards, William (Merioneth)
Maclennan, Robert
Wallace, George


Ellis, John
McNamara, J. Kevin
Watkins, David (Consett)


English, Michael
Mahon, Peter (Preston, S.)
Watkins, Tudor (Brecon &amp; Radnor)


Ensor, David
Mahon, Simon (Bootle)
Wellbeloved, James


Evans, loan L. (Birm'h'm, Yadley)
Mallalieu, E. L. (Brigg)
Whitaker, Ben


Faulds, Andrew
Manuel, Archie
Whitlock, William


Fernyhough, E.
Marks, Kenneth
Wilkins, W. A.


Fletcher, Raymond (Ilkeston)
Marquand, David
Williams, Alan Lee (Hornchurch)


Fletcher, Ted (Darlington)
Mellish, Rt. Hn. Robert
Williams, Mrs. Shirley (Hitchin)


Foley, Maurice
Mendelson, J. J.
Williams, W. T. (Warrington)


Ford, Ben
Millan, Bruce
Winnick, David


Forrester, John
Miller, Dr. M. S.
Woof, Robert


Fowler, Gerry
Milne, Edward (Blyth)
Yates, Victor


Fraser, John (Norwood)
Molloy, William



Freeson, Reginald
Moonman, Eric
TELLERS FOR THE NOES:


Galpern, Sir Myer
Morgan, Elystan (Cardiganshire)
Mr. Alan Fitch and




Mr. Neil McBride.

Amendments made: No. 154, in page 11, leave out lines 1 to 9 and insert:
(2) Subjection (1) above does not apply to—

(a) earned income, or

(b) income derived from any sum, or from assets representing any sum, paid by way of, or in satisfaction of a claim for, damages in respect of personal injury to the infant (including any disease, and any impairment of his or her physical or mental condition),


but, subject to those exclusions and to subsection (2A) below, the said subsection applies to all such amounts as would fall to be included in computing the infant's total income apart therefrom, and so applies notwithstanding anything in any other enactment (including, except so far as the contrary is expressly provided, any enactment passed after this Act) requiring any amount not to be treated as income of anyone other than the infant.

(2A) Section 397(3) of the Income Tax Act 1952 (settlements on children: income not exceeding £5 not to be treated as income of settlor by virtue of section 397(1) of that Act) shall cease to have effect, but neither the said section 397(1) nor subsection (1) above shall have effect in relation to an infant for any year of assessment for which his aggregate income, so far as it would fall within one or other of those provisions but for this exception, does not exceed £5.

No. 155, in page 11, leave out lines 18 to 20.

No. 156, in line 28, leave out from 'except' to end of line and insert:
'so far as it affects the operation of section 397(1) of the Income Tax Act 1952'.—[Mr. Diamond.]

Orders of the Day — Schedule 8

AGGREGATION OF INFANTS' INVESTMENT, ETC., INCOME

Mr. Diamond: I beg to move Amendment No. 157, in page 62, line 9, leave out from beginning to 'made'.

Mr. Deputy-Speaker (Sir Eric Fletcher): I suggest that we take with this Amendment, Amendment Nos. 158, 159, 160, 161, 162, and 163.

Mr. Diamond: The first four of these Amendments are relieving Amendments dealing with paragraph 5 of this Schedule. There is at the moment a provision that annual interest and life assurance premiums can be made by a child and set off against the child's income. It is intended that it should be allowable where a child's income is aggregated with the parents' income. That is not absolutely clear in the Bill and this provision makes it clear.
The remaining three Amendments are purely drafting. As was stated by the hon. Member for the Cities of London and Westminster (Mr. John Smith) in standing Committee, it is necessary to make absolutely clear what is the position with regard to the extra tax which a parent may have to find where there is trust income. It is necessary to make

it clear that he is not required to find the tax twice over.

Amendment agreed to.

Further Amendments made: No. 158, in page 62, line 12, after 'computing', insert ' for that period.'

No. 159, in page 62, line 14, after ' payments ', insert ' in that period'.

No. 160, in page 62, line 20 leave out ' and in respect of.'—[Mr. Diamond.]

Amendment proposed: No. 161, in page 62, line 34, leave out from ' tax' to 'if' in line 36 and insert:
'chargeable on and payable by him or her for the year exceeds that which would have been so chargeable and payable'—[Mr. Diamond.]

Mr. Deputy Speaker: I think that it would be convenient if we were to take with this Amendment, Amendments Nos. 162 and 163.

Mr. John Smith: I would like, very briefly, to say something on Amendment No. 163. This relates to the recovery of children's tax by parents from trustees, and there are two points here. I think that it must be cleared up whether the child's income is to be treated as the top slice of the parents' income or as an average of the parents' total income. This is obviously a very important point, and it will arise immediately this enactment comes into force.
The second point is that we still do not know how foreign trustees are to be dealt with. Will they accept the certificate mentioned in this part of the Schedule, and how are parents to enforce this against foreign trustees? How does a parent recover tax from foreign trustees? As the Chief Secretary knows, I have actual cases in mind. Indeed, it may well be that the foreign trustee has an actual duty not to pay this money to the parent. It seems to me that there is a difficulty here and I would be grateful if it could be cleared up.

Mr. Diamond: I am not quite clear what difficulty the hon. Gentleman still has in mind. If there is a foreign trustee who has remitted income to a resident child, the first question is whether that remittance is taxable income or not. One would have to find out all the circumstances, such as whether it is at present


income of the child taxable in this country or not. But generally, the Revenue would not propose to pursue this matter with any unnecessary vigour.
The parent would be required to make a return of the child's income, and the income would be aggregated with the parent's. If the income is known then it is aggregated, and if the tax is payable, the parent has a right of recovery as against the trustee. It cannot be the case that the trustee is unable to provide the tax. It is part of the income which the trustee would pay to the children.
It may be that to that extent in future years the income of the child would be reduced, but there would be no particular difficulty there. This is a normal circumstance so far as trusts are concerned; when income is diverted for one purpose it is not available for another purpose.
If the hon. Gentleman is anxious about the attitude of the Revenue, I repeat that it will not pursue this with undue vigour, but will try to carry out the law, as Parliament places a duty upon it to do.

Amendment agreed to.

Further Amendments made: No. 162, in page 62, leave out lines 37 to 43 and insert:
Provided that, so far as the excess is attributable to trust income which has not been distributed, the right conferred by this paragraph shall be exercisable against that income instead of against the infant.

No. 163, in line 46, leave out 'sub-paragraph (2) above' and insert 'this paragraph from trustees'.—[Mr. Diamond.]

Mr. Diamond: I beg to move Amendment No. 164, in page 63, line 7, at end insert:

Loss relief

7A.—(1) A claim for relief under section 341 of the Income Tax Act 1952 (set off of trade etc. losses against general income) may require that the relief be given without any reference to income treated by virtue of this Schedule as income of the person sustaining the loss or of that person's spouse.
(2) Where income so treated is not excluded by virtue of sub-paragraph (1) above, it shall be treated for the purposes of section 15 (1) of the Finance Act 1953 (relief to be given by treating loss as reducing claimant's income first, and then income of claimant's spouse) as distinct from that of the claimant,

and as if referred to therein after that of the spouse.

This Amendment meets a point which was raised with the Revenue by the Accountants Joint Parliamentary Committee and it prescribes the order in which trading losses are to be allowed against income where the option under sub-paragraph (1) of the Amendment is not exercised.

At present, as the House is aware, there is an option which the taxpayer has that where a trading loss has been incurred it can be set against the taxpayer's income only and not be set against the spouse's income if the taxpayer does not wish that.

In that case, any unsatisfied loss can be carried forward. It was requested that a similar option should be given with regard to aggregated income, and this subsection provides for that. It provides that the loss is to be set against the child's income only after it has been used against the claimaint's income first.

Amendment agreed to.

11.15 p.m.

Mr. Diamond: I beg to move, That further consideration of the Bill, as amended, be adjourned.
We have completed what is on the Amendment Paper concerning Clause 15 and Schedule 8. I think that perhaps this would be a convenient time to adjourn our consideration of the Bill.

Mr. Patrick Jenkin: rose—

Mr. Deputy Speaker: I am obliged to put the Question immediately without debate.

Mr. Jenkin: I believe that, under the Standing Orders, one Opposition spokesman is allowed to make a brief reply.

Mr. Deputy Speaker: No. If the hon. Gentleman rose to a point of order, the answer to it is that I am obliged by the Resolutions of the House to put the Motion without debate.

Mr. Jenkin: Further to that point of of order. We are in some difficulty. As the Chief Secretary knows, we on this side of the House indicated that we were prepared to go on and deal with the wholly uncontentious matters dealt with in Clause 16 and Schedule 9 because we are on the last lap of the Bill before the


Guillotine. This is the second time we have offered to do this late at night or in the small hours of the morning.

Mr. Deputy Speaker: I appreciate the hon. Gentleman's difficulty. I am also in a difficulty that I am governed by the Resolutions of the House which require me to put the Motion forthwith without debate. Therefore, I have no alternative but to put the Motion forthwith.

Question put and agreed to.

Bill, as amended (in the Standing Committee), to be further considered Tomorrow.

Orders of the Day — ANIMAL FEEDINGSTUFFS, NORTHERN IRELAND (COST)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Harper.]

11.17 p.m.

Mr. Henry Clark: The subject which I wish to raise is not new. The Minister is well aware that most of the costs of agricultural production are higher in Northern Ireland that in other parts of the United Kingdom and that farmers' incomes in Northern Ireland are correspondingly lower. Some of the high costs which we experience in Northern Ireland are the result of our geographical position and climate, and we cannot expect the Minister to do much about that. But the high prices we are paying for animal feedingstuffs result, at least in part, from decisions taken by the Ministry and changes in the pattern of production and marketing. These the Government can adjust for the benefit of the whole of the United Kingdom and the survival of farmers in Northern Ireland.
Northern Ireland is a country of small farms, as I have frequently told the Minister. There are 40,000 small farms. Climatically, we are a country of grass rather than grain production. To bring the incomes of farmers in Northern Ireland even on to an approximate level with those which industrial workers enjoy, they have to concentrate very much on livestock production. Backed by our Minister of Agriculture in Northern Ireland and by the enlightened policy of our marketing boards, the production of

bacon, beef, milk and eggs has been built up to a level of efficiency comparable with the very best in the world. One can say that, particularly in bacon, our best units are probably larger and more efficient than their equivalent in Denmark and Scotland, or anywhere else.
Our beef and milk are largely produced from grass, but we must depend on imported grain for pigs and poultry. Brought-in feedingstuffs account for about half the total farm purchases in Northern Ireland. Today, we grow about 200,000 tons of our own barley, import another 150,000 tons and buy in 200,000 tons of imported maize for dollars. We also have to import feeding wheat and a considerable quantity of the wheat offals needed to make up feed rations.
Grain production today in Northern Ireland is approaching a maximum. It cannot be extended unless the price paid justifies ploughing up even more marginal land than we are using at present. Inevitably, therefore, we in Northern Ireland are more dependent on livestock production that the average farmer in the rest of the United Kingdom.
Bacon pig production alone produces 25 per cent. of farm revenue, and there are 22,000 bacon producing units among our 40,000 and more farms in Northern Ireland. The 1950s and early 1960s were the period of expansion and consolidation of our pig and poultry industry. In that period, when Great Britain was still importing barley, we could compete on an almost level footing with producers on this side of the Irish Sea. The barley which we bought on the world market cost no more than that used to make up rations in England and Scotland.
But when, after 1962, Great Britain first became self-sufficient in barley and then in surplus the cost factors started to turn against us. Today, the price of barley to the English and Scottish food compounder is £3 to £4 a ton lower than it is to the compounder in Northern Ireland. Today's price of barley quoted to me by telephone this morning was £19-£21 per ton in Great Britain, £19 in the cheapest markets and £21 in the dearest. Ex-silo at Belfast harbour the price was £24 10s.
This price differential must be reflected in the cost of pig rations. If one accepts


an overall average of three bacon pigs per ton of food, it is costing even the most efficient producers in Ulster very nearly £1 extra to fatten each pig. This cuts the gross profit margin on pig production by about half.
One of the best farmers I know told me on Monday that he had just completed the costing of fattening his last batch of weaners from 45 lbs. to bacon weight. He reckoned that he had made at most 7s. a pig. Another farmer told me that on Small Farmers' Scheme costings he made 33s. a pig in 1966, but that this had fallen to 24s. in 1967. He doubts whether he will break 10s. on the same calculations in the current year.
For poultry, the necessity of importing feeding wheat and wheat offals from Britain raises the cost of feedingstuffs by £2-£3 a ton. Prices quoted today for wheat are £20 to £21 a ton in Great Britain and £23 to £24 in Belfast. The differential adds as much as 1½d. to the cost of producing a dozen eggs.
Two factors have tended to increase the differential. During recent years the minimum import prices for grain, while not have an immediately obvious effect on the costing, have prevented the Ulster millers from taking advantage of any short-term fall in world grain prices. When the Conservative Government introduced this scheme they said that they would always keep in mind the problem of feedingstuff costs in Northern Ireland. I hope that the Minister will ante up on that. More recently, devaluation has directly raised the price of our imported feedingstuffs, while it has not been fully reflected in the cost of home-grown barley in England. It must be emphasised that the flexible feed formula, actually damages us in Northern Ireland, because it is based on a balanced sample from all over the United Kingdom, and reflects the low price of barley in England rather than the high price in Belfast.
What I have been saying is not simply "hard cheese" for the Ulster farmer. It is economic nonsense for the United Kingdom, in view of its present balance of payments struggle. Bacon is one area where there is wide scope for replacing imports. So far, in the United Kingdom we have failed to come up to our 36·9 per cent. quota of bacon consumption. We have a shortfall of 3·2 per cent. which

is being made up by additional imports. Though bacon production is increasing in England, it is increasing only very slowly in Northern Ireland, and the Northern Ireland percentage of the United Kingdom market has fallen from a steady 14 per cent. between 1962 and 1966 to a bare 11 per cent. now.
Part of the 2,000 tons of maize we buy abroad for dollars, even more nonsensically, could be replaced by English barley if the price differential could be overcome.
The Minister may complacently tell me that the Ulster pig herd is at last on the increase. The March figures are higher than they have been for some time, although the true reason for this is not the profitability of pigs but the complete lack of profitability of eggs, and mixed farmers looking anywhere for a profit have moved back into pig production. Unfortunately, they will find little enough profit in pigs. Many of them may decide to realise their capital, let their land for grazing and increase the present quota of milk, which will be a considerable embarrassment to the Ministry at the end of this year.
The Minister, I know, recognises the problem, and I ask him tonight to investigate it very carefully, and at once. I ask when he has completed his investigation that he will take action which will put a decent yield into pig and poultry production in Northern Ireland, and I ask him to take action which will assist the solution of our balance of payments problem and allow agriculture to play the part in national recovery that all British agriculture is anxious to play.

11.27 p.m.

Lord Hamilton: I congratulate my hon. Friend the Member for Antrim, North (Mr. Henry Clark) on so cogently initiating this extremely important debate. During the last financial year the Northern Ireland agricultural industry has been faced with an alarming price escalation in agricultural costs, resulting in a serious and obvious effect on farm income. Apart from increases in Bank Rate, wages, electricity and farm machinery, the heaviest increase in the cost is due to the fact that we have no home-grown barley market, resulting in the necessity to import at least 50 per


cent. of all feedingstuffs consumed in Northern Ireland.
Obviously, devaluation has aggravated this situation yet further, for on 13th March the then Minister of Agriculture, in reply to a Question tabled my myself, said:
Assuming a price increase of one-sixth, the landed cost of animal feed imported into Northern Ireland would be increased by about £4¼ million …".—[OFFICIAL REPORT, 13th March, 1968; Vol. 760, c. 321.]
In fact, the Northern Ireland farmer has to pay between £3 and £3 10s. per ton more for compounds than his counterpart in Yorkshire.
Unfortunately, the disparity of costs is aggravated further by the fact that the majority of our production has to be imported to the main consumption area, that is to say England. Approximately £89 million is exported per annum. So, once again, the Northern Ireland farmer is forced to bear the cost of transporting the processed product across the Irish Sea. For, unlike other industries, agriculture is unable to recoup this additional burden through higher prices.
The total cost price differential is approximately £7·9 million per annum, or a parity income ratio of only 78 per cent. This is, of course, an alarming and extremely serious situation, which is constantly deteriorating through inflation.
I ask the Minister to give an assurance that the remoteness grant will be reviewed without delay, since the figures quoted during the debate have proved, beyond doubt, the urgent need for reassessment of this extremely important grant.
I also ask the Minister to give the Government's acknowledgment of the seriousness of the current situation, for it must be appreciated that the industry, through the present lack of incentive, cannot be expected to continue expansion of production, thus saving the nation's import bill, unless this differentiation in farm income is drastically reduced.
Furthermore, it should be remembered that, to encourage agriculture to expand and prosper in remote areas, the incentive of additional grants for agriculture are just as important as those for other industries. Again, a policy like minimum import prices, while benefiting the majority of the United Kingdom, is in no

way beneficial to Northern Ireland. I hope that the Minister will investigate this matter.
Recently, a research economist predicted that, due to devaluation and the resultant rise in the price of imported feedingstuffs, the pig breeding herd would decline by one-sixth. That is a most serious forecast which will defeat the Government's expansion plans unless immediate action is taken.
Finally, it must be recognised that Northern Ireland is a country of small farmers and, therefore, the small farmer is particularly dependent on imported feedingstuffs, since, owing to the small size of farm holdings, he is forced into intensive production of either eggs or pigs, both of which require a high concentration of imported feeding stuffs, resulting in his having to pay £1 per pig and l½d. per dozen eggs more on feed than his counterpart in England.

11.31 p.m.

The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. James Hoy): Let me begin by expressing my thanks to the hon. Member for Antrim, North (Mr. Henry Clark) for initiating this debate and to the hon. Member for Fermanagh and South Tyrone (Lord Hamilton), who supported him.
The Government have always recognised that farmers in Northern Ireland face problems which may not be present in the same degree in other areas of the United Kingdom, and it is for that reason that I express my gratitude to the hon. Gentlemen for having drawn attention to this issue tonight.
The hon. Member for Antrim, North, and some of his colleagues met my right hon. Friend in April to discuss the general question of the difficulties of Northern Ireland's farmers. They made a number of points and left some figures bearing on them. I believe that I am right in saying that the hon. Gentleman regarded it as a very useful meeting.
My right hon. Friend and the Minister of Agriculture for Northern Ireland had already agreed together that their two Departments should look jointly into the question of farm costs in the two countries.
The House will appreciate that it is not sufficient for an examination of this nature to study merely one particular cost item, since differences in other farm costs such as fertilisers and labour may affect the overall balance of advantage between different parts of the United Kingdom.
The examination which was set in train is not yet complete, and any action by the Government, naturally, must be based upon its results. However, I will give the House a preliminary indication of what it is likely to show, and I will also set out the main factors which must be taken into account in considering the problems of Northern Ireland agriculture. I hope that this will help to put the whole matter in perspective, without disguising the genuine nature of the problems in Northern Ireland.
It has been pointed out already that, on average, farms in Northern Ireland are considerably smaller than in the rest of the United Kingdom. Natural conditions tend to be difficult, and market prices are usually lower. For all these reasons, the average level of farm incomes is lower than in the United Kingdom as a whole. Nevertheless, the total picture is by no means wholly black.
Until four years ago, the trend in net farm incomes broadly followed the trend for the United Kingdom as a whole. At the same time, the special assistance grant helped and still helps to offset the effect of lower market prices. At the 1966 Annual Review, the Government raised the grant to its present level of £1¾ million a year. I think that it is agreed that that was a very helpful step in the right direction, and I note what both hon. Gentlemen said about it again tonight.
Furthermore, a number of the Government's grants designed to help less favoured sectors of the industry have been of particular value in Northern Ireland. The Small Farmers' Scheme, for example, has been widely used, for which we are grateful, and the Farm Improvement Scheme has had an excellent response.
The grants to encourage farm amalgamation and thereby create more economically viable holdings should be of special interest in view of Northern Ireland's farm structure. But, as hon. Gentlemen know, this has to be done voluntarily.

Over the last four years, however, the trend in farm incomes in Northern Ireland has been lagging compared with farm incomes in Great Britain as a whole, and other remote areas experienced a fairly similar trend in incomes. To some extent this may be only temporary.
There was, as the House will remember, a general decline in pig production from 1965 onwards, and there were difficulties on the livestock side generally. As the hon. Gentleman has said, and I agree, since Northern Ireland agriculture is based largely on livestock farming, the effects were naturally more marked in the overall results for Northern Ireland than in those for Great Britain.
We set out to deal with these problems in the livestock sector at Annual Reviews which have taken place since. As the increases in guaranteed prices for livestock take effect, we would hope to see an improvement in farm incomes. Nevertheless, the examination that we are now carrying out appears to substantiate the view that in the last few years trends in farm costs have been moving to the relative disadvantage of Northern Ireland farms. There certainly appears to have been a widening of the differential between Northern Ireland and average Great Britain feed prices.
The main reason for this is that the increase in home production has made available to farmers in Great Britain with ready access to it a supply of feed grain at prices below those ruling on the world market, where prices have tended to be kept up by the absence of the surpluses which had pressed on the market before 1962. This is exactly what the hon. Member for Antrim, North was saying. Northern Ireland farmers have, therefore, had to import feed grains at the relatively higher world prices because of the cost of transporting grain from Great Britain to Northern Ireland.
I should add, while explaining the difference in feed costs, that, contrary to some things that have been said, devaluation has not been one of the causes, since, although it has resulted in some increase in the cost of cereal imports, the effect has been no greater in Northern Ireland than in Great Britain. The minimum import prices for cereals likewise have not affected the difference in feed costs. Naturally, in future years they might influence the prices of imported feed grains,


but their object is to do no more than set a reasonable floor in our market and not to make imported feed expensive. I give the hon. Gentleman that assurance.
To establish what the facts are must be the first need. The hon. Member and his noble Friend have given us information which we have found very useful in this connection. We have wasted no time in starting our examination. As I have already mentioned, some broad conclusions are already emerging.
We are grateful to the hon. Member for raising the issue tonight, but I cannot, however, say whether, and if so what, action is called for. There are a number of considerations that have a bearing on this quite apart from the structural and other rather special features of Northern Ireland's agriculture. In Northern Ireland, there are social and regional problems, not least the problem of employment, and all aspects need to be taken into account. In my own country, we have similar problems so I am able to appreciate those in Northern Ireland.
These are not points to go into now, but I should like to refer to two further particular problems. The first is that the evidence examined and taken into account at each Annual Review includes figures showing the financial position of the different types of fanning—livestock, arable, and so on—as well as the overall position in the different countries of the United Kingdom. Consequently, the determinations at past Annual Reviews reflect the situation and needs of livestock farms, including those in Northern Ireland. They do not, it is true, affect the cost differentials between one part of the United Kingdom and another but they do take account of the income position in Northern Ireland.
Secondly, the differential between Northern Ireland and Great Britain as a whole is not a sufficient basis for Government action since the figure for Great

Britain reflects the costs of a very wide range of types and sizes of farms, some of them in very favourable circumstances and some in circumstances very similar to those in Northern Ireland. There are remote farms in difficult conditions in the other three countries.
It is thus not simply a problem of comparing figures based on straight averages across the board, since these could obviously be misleading and could allow unbalanced and possible invalid comparisons to be drawn. What may be more realistic is to try to compare as closely as possible like with like in the two countries. We shall have to study these points and take them into account in our final decisions.
We have made a note of all the points which hon. Members have brought away from their visit and we have been in touch with the Minister in Northern Ireland. I assure hon. Members that all the points they have raised will be fully taken into account when we come to make the decisions, which I hope will prove helpful. But until we have made this complete study with the Minister in Northern Ireland, I do not think hon. Members would expect me to go further tonight.

Mr. R. Chichester-Clark: Can the hon. Member say—within weeks—when this joint comparative study of conditions is likely to be completed?

Mr. Hoy: I am sorry, but I cannot. If one is doing such a study oneself, one can give an indication as to completion but the hon. Gentleman, who has himself been in touch with the Minister in Northern Ireland and is not unacquainted with him, will know that we have to do it jointly. But I assure him that no time will be lost.

Question put and agreed to.

Adjourned accordingly at sixteen minutes to Twelve o'clock.